IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING
The Board nominates each of these individuals for election at the Annual Meeting. Each nominee is currently a member of the Board.
As described in our Corporate Governance Guidelines, the Nominating and Governance Committee will consider shareholder nominations for directors who meet the notification, timeliness, consent and
information requirements of our Articles of Incorporation and Bylaws.
The Committee makes no distinctions in evaluating nominees for positions on the Board based on whether or not a nominee is recommended by a shareholder, provided that the procedures with respect to nominations referred to above are followed. Potential candidates for nomination as director candidatesdirectors must provide written information about their qualifications and participate in interviews conducted by individual Board members, including the chairs of the Audit or NominatingBoard chair and Governance Committees.relevant committee chairs. Candidates are evaluated using the criteria adopted by the Board to determine their qualifications based on the information supplied by the candidates and information obtained from other sources. The Nominating and Governance Committee will recommend candidates to the Board for election as director to the Boarddirectors for approval, only if the Committee determines, in its judgment, that they have the specific minimum qualifications described above.
The shareholder filing the notice of nomination must describe various matters as specified in our Articles of Incorporation and Bylaws, including such information as name, address, occupation and all direct and indirect ownership interests, derivative interests, short interests, other economic incentives and rights to vote any shares of any security of the Company and other material interests in the Company. Shareholders nominating directors must disclosedisclose: the same information about a proposed director nominee that would be required if the director nominee were submitting a proposal; any other information that would be required to be disclosed in a proxy statement in a contested election pursuant to the Securities Exchange Act of 1934; any material relationships between the shareholder proponent and the director nominees; and, at the Company’sCompany's request, any other information that would enable the Board to determine a nominee’snominee's eligibility to serve as a director, including information relating to the proposed nominee’snominee's independence or lack thereof.
We also reimburse directors for reasonable out-of-pocket expenses incurred in connection with attending and participating in Board and Committee meetings and director education programs. Mr. Bartlett also serves as a director of our Australian holding and operating companies, and receives an annual
We intend to satisfy any disclosure obligations under Item 5.05 of Form 8-K by posting on our website information about amendments to, or waivers from, any provision of the Financial Management Code of Professional Conduct that applies to our President and Chief Executive Officer, President, Chief Financial Officer or Corporate Controller.
In accordance with the Corporate Governance Guidelines, the Board undertook reviews of director independence in February 20152021 and February 2016.March 2022. During these reviews, the Board received a report from the Company’sCompany's General Counsel noting that there were no transactions or relationships between the Company or its subsidiaries and any of the independentnon-employee directors, (i.e., Messrs. Bartlett, Boot, Danahy, Eason, Henderson, Sievert and Tulin and Mses. Detrick and Phillips) nor any member of such director’sdirector's immediate family. The purpose of this review was to determine whether any of those directors had a material relationship with the Company that would preclude such director from being independent under the listing standards of the New York Stock Exchange ("NYSE") or our Corporate Governance Guidelines.
As a result of this review, the Board affirmatively determined, in its judgment, that each of the ninenon-employee directors named above are independent of the Company and its management under the applicable standards. Mr. Woodring, our Chief Executive Officer, andIn 2021, only Ms. Manning, our President areand Chief Executive Officer, was not an independent directors.director.
The process for communicating with the Board requires that the General Counsel make a record of the receipt of any such communications. All properly addressedappropriate communications will be delivered to
BOARD COMMITTEE MEMBERSHIP1
| | | | | | | | | | | | | | | | | | | | |
| Director | Independent | Audit | Human Capital and Compensation | Investment | Nominating and Governance | Risk |
| Pina Albo | yes | | member | member | member | |
| Christine R. Detrick | yes | | member | | chair | |
| John J. Gauthier | yes | member | | chair | | member |
| Patricia L. Guinn | yes | chair | | member | | member |
| Hazel M. McNeilage | yes | | chair | | member | |
| Stephen O'Hearn | yes | member | | member | | member |
| Shundrawn Thomas | yes | | member | | member | |
| Stanley B. Tulin | yes | member | | member | | chair |
| Steven C. Van Wyk | yes | member | | | | member |
| Number of Meetings in 2021 | | 8 | 10 | 4 | 6 | 4 |
1As of ContentsApril 1, 2022. Ms. Detrick and Mr. Tulin retire from the Board effective May 25, 2022.
At this time, Ms. Manning and Messrs. Eason, Ng and Nichols do not serve on any Board committees.
Board Committee Roles & Responsibilities
There are five standing committees of the Board. The Board has adopted written charters for each committee, which are available on our website at www.rgare.com. Each of the committees consists solely of directors who have been determined by the Board to be independent in accordance with SEC regulations, NYSE listing standards, and the Company’s director independence standards. The following describes the roles, responsibilities and independence standards of each committee.
AUDIT COMMITTEE
AUDIT COMMITTEE |
| | | | | | | |
| Roles and Responsibilities |
| ● | Responsible for the appointment, compensation, retention and oversight of the work of our independent auditor. |
| ● | Oversees our accounting and financial reporting processes and policies and the integrity of our financial statements. |
| ● | Supervises the adequacy of our internal controls over financial reporting and disclosure controls and procedures. |
| ● | Pre-approves audit, audit-related and non-audit services to be performed by the Company's independent auditor. |
| ● | Reviews reports concerning significant legal and regulatory matters. |
| ● | Reviews the plans and performance of our internal audit function. |
| ● | Oversees the Company's ethics and compliance policies. |
| ● | Reviews and discusses our filings on Forms 10-K and 10-Q, including the financial information in those filings. |
| | | | | | | | |
| Independence and Financial Literacy |
| ● | The Board has determined that the members are "independent" within the meaning of SECSecurities and Exchange Commission regulations applicable to audit committees and the NYSE listing standards. |
| ● | The Board has determined that all of the members have accounting and related financial management expertise within the meaning of the NYSE listing standards. |
| ● | The Board has determined that all the members are qualified as audit committee financial experts within the meaning of SECSecurities and Exchange Commission regulations. |
| | |
| HUMAN CAPITAL AND COMPENSATION COMMITTEE |
| Roles and Responsibilities |
| ● | Establishes and oversees our general compensation, benefit programs and benefits programs.human capital matters. |
| ● | Reviews and approves the performance and compensation of the CEO, other named executive officers and members of our senior management. |
| ● | Sets performance measures and goals and verifiesreviews the attainment of performance goals under performance-based incentive compensation plans. |
| ● | Oversees key issues, policies and programs relating to the Company's workforce, including recruitment, engagement, retention, development and performance management. |
| Independence |
| ● | The Board of Directors has determined in its judgment, that all of the Committee's members are independent within the meaning of the NYSE listing standards. |
| ● | For purposes of its independence determination, the Board considered the enhanced independence standards for compensation committees under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 which are required by the SEC for the listing standards of national securities exchanges. |
| Interlocks and Insider Participation |
| ● | The members of the Human Capital and Compensation Committee are not and have never been officers or employees of the Company or any of its subsidiaries. |
| ● | No directors or executive officers of our Company serve on the compensation committee of another company of which a member of our Human Capital and Compensation Committee is an officer. |
| | |
FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE |
| Roles and Responsibilities |
| ● | Assists the Board in connection with its oversight responsibilities for the Company's risk, investment and finance policies, practices, programs, procedures and strategies.strategies, including asset, liability and risk management guidelines, limits and procedures. |
| ● | Reviews monitors,the quality, performance and when appropriate, approvesrisk characteristics of the Company's programs,investment portfolios, and the alignment of assets with mandate guidelines, including duration, designed to alight the asset portfolio with corresponding liabilities. |
| ● | Reviews strategies and policies and strategies relating to financialvarious categories of securities and investment risksother investments, including derivatives, and overall enterpriseother tools and capabilities, with material risk management Governance Guidelines.implications. |
| Independence |
| ● | The Board of Directors has determined that all of the Committee's members are independent. |
| | |
| NOMINATING AND GOVERNANCE COMMITTEE |
| Roles and Responsibilities |
| ● | Develops and implements policies and practices relating to corporate governance. |
| ● | Reviews and monitors implementation of our Corporate Governance Guidelines.Guidelines and other governance policies. |
| ● | Identifies individuals qualified to become members of the Board, consistent with the criteria established by the Board; develops and reviews background information on candidates for the Board; and makes recommendations to the Board regarding such candidates. |
| ● | Prepares and supervises the Board's annual review of director independence and the performance of self-evaluations conducted by the Board and committees. |
| ● | Oversees the succession planning process for our CEO, which includes reviewing development plans for potential successors evaluating potential internal and external successors for executive and senior management positions, and development and periodic review of the Company's plans for CEO succession in various circumstances. Evaluates potential internal and external successors for other executive and senior management positions. |
| Independence |
| ● | The Board of Directors has determined in its judgment, that all of the Committee's members are independent within the meaning of the NYSE listing standards. |
| | | | | | | | |
| | |
| RISK COMMITTEE |
| Roles and Responsibilities |
| ● | Assists the Board with its oversight responsibilities by promoting appropriate practices regarding risk management. |
| ● | Reviews and oversees management's enterprise risk management programs and policies, and monitors risks relating to the Company's business, operations, compliance, reputation and ethics. |
| Independence |
| ● | The Board of Directors has determined that all of the Committee's members are independent. |
| | |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
We doThe Company does not have any agreements, transactions or any relationships with related persons such as directors, nominees, executive officers or immediate family members of such individuals. At least annually, we review all relationships between ourthe Company and our directors and executive officers and their immediate family members to determine whether such persons have a direct or indirect material interest in any transaction with us.
Our Global Legal Services staff is primarily responsible for developing and implementing processes and controls to obtain information from the directors, nominees and executive officers with respect to related person transactions. If such a transaction arose, our Global Legal Services staff would determine, based on the facts and circumstances, whether we or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, related person transactions that are determined to be directly or indirectly material to us arewould be disclosed in this Proxy Statement andthe proxy statement or other SEC filings.
OurThe Board has adopted a policy as part of its corporate governance guidelinesCorporate Governance Guidelines that requires advance approval by the Board before any of the following persons knowingly enter into any transaction with the Company or any of our subsidiaries or affiliates through which such person receives any direct or indirect financial, economic or other similar benefit or interest. The individuals covered by the policy include any:
director,• director;
• nominee for director,director;
• executive officer,officer;
• holder of more than 5% of our voting securities,securities;
• immediate family member of such a person, as that term is defined in the policy,policy; and
•charitable entity or organization affiliated with such person or any immediate family member of such person.
Transactions covered by the policy include any contract, arrangement, understanding, relationship, transaction, contribution or donation of goods or services, but excludes transactions with any charitable entity or organization affiliated with a director, nominee for director, executive officer, 5% security holder or any immediate family member of such a person if the amount involved is $2,500 or less. At this time, the Company is not involved in any transactions that would be covered by this policy.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Our Company and Board of Directors believe that creating long-term value for our shareholders implicitly requires executing sustainable business practices and strategies that include consideration of environmental, social, and governance ("ESG") impacts by the Company as well as how ESG
considerations impact RGA. Strong governance, effective management systems and robust controls are core to the Company. We strive to govern the Company in a sustainable manner that recognizes ESG concerns are integral to our long-term operational goals and strategies. We understand that we have a responsibility to monitor and control our environmental and societal impact and adopt responsible practices on environmental, social and governance issues as an integral part of Contentsour obligations regarding corporate strategy, risks, opportunities, and performance.
The Company's Board of Directors plays an active role in ESG oversight. In 2021, the Board and its committees discussed and provided oversight of the Company’s ESG policies, strategy and goals, including community engagement, environmental sustainability of operations, the role of ESG scores in investment decisions and diversity, equity and inclusion programs. The Board recognizes that healthy communities, sustainable operations, an inclusive and diverse workforce and responsible investment and data practices are important for the long-term success of the company, and that RGA has a responsibility to support these issues and that these factors can provide RGA with risks and opportunities.
Environmental
The impact of an increase in global average temperatures will cause changes in weather patterns, resulting in more severe and more frequent natural disasters such as forest fires, hurricanes, tornadoes, floods and storm surges and may impact disease incidence and severity, food and water supplies and the general health of impacted populations. These climate change trends are expected to continue in the future and may impact nearly all sectors of the economy to varying degrees.
COMPENSATION DISCUSSION AND ANALYSISClimate change risk is actively monitored with regards to our investment portfolio and potential impacts on mortality and morbidity. While the long-term impacts of climate change for the Company and our clients are subject to a variety of influences, as part of the ongoing monitoring of the Company’s risks and exposure to anything that might change underlying mortality and morbidity trends, scenario reviews and planning are undertaken for various climate-change related events. The Company utilizes information derived from those scenario reviews to help inform the public of the challenges of climate change through research articles available on our website.
The Company is committed to operating in an environmentally responsible manner and strives to be a good steward of the environment. Our headquarters, based in Chesterfield, Missouri, was constructed in line with LEED Gold requirements. The building was designed to be highly energy efficient and includes a variety of environmental features such as a state of the art HVAC and window shade system, a sophisticated building automation system, rain water collection system, and the landscaping was designed with native grasses and plants to minimize the use of irrigation. Many of the Company’s other offices around the globe also are in buildings with environmental certifications.
Over the past few years we have undertaken a number of other initiatives that exemplify our commitment to the environment, such as developing employee-led "green" committees, reducing our paper consumption and implementing a robust recycling and waste reduction and/or single-use plastics reduction programs, not only at our headquarters, but at many of our leased facilities, as well.
Social
As a leading global life and health reinsurer, the way we operate, the work we do, and the support we provide to our local communities can all be traced to a desire to extend and improve the individual lives we touch, whether directly or through our business and community partners.
Diversity, Equity and Inclusion. The Company and Board are committed to fostering a diverse and inclusive workplace that respects and embraces all of our employees. We strive to understand one another by providing a safe environment where individuals may share their stories and ideas, where learning is encouraged and one feels accepted and supported in our differences. We believe that diversity across the Company makes us more innovative, creative and able to anticipate and meet the needs of a diverse set of customers.
The Company endeavors to cultivate an open environment in which diverse experiences and perspectives are welcomed. Our diversity, equity and inclusion ("DEI") initiatives are focused in four areas:
•enabling an inclusive workplace;
•attracting, retaining and engaging a diverse workforce;
•fostering diverse partnerships in the communities where we operate; and
•ensuring accountability and shared responsibility throughout the organization.
Many actions have been undertaken over the last year to improve diversity and promote equity and inclusion within the Company, including:
•In 2021, the Human Capital and Compensation Committee updated its charter to include internal and external pay equity and diversity, equity and inclusion.
•Diversity, equity and inclusion is a key area of focus for our learning and development strategies. In 2021, our employees completed various programs and trainings that addressed our commitment to diversity and inclusion, including Respect in the Workplace training, Everyday (unconscious) Bias training and Inclusive Leadership training.
•We continue to build on our strategy to develop a diverse and highly inclusive workforce. We have a global council, comprised of senior executives to provide leadership and oversight to our overarching global DEI strategy and actions. We support and maintain Regional Diversity, Equity and Inclusion Councils as a way for employees to champion strategies and engage in helping build a more diverse and inclusive organization at a local level.
•We are committed to creating a workplace that reflects a broad range of diverse characteristics. Talent acquisition teams have partnered with local teams around the world to increase our presence at universities and industry events that focus on diverse hiring. We invest our efforts with organizations and activities where we can reach a spectrum of individuals such as those participating in the International Institute of Black Actuaries Summit, the DEI Expanding Opportunities in Insurance in the U.S. event sponsored by the American Council of Life Insurers and, in Japan, the Dive In Festival for diversity & inclusion in insurance, as well as expanding our online partnerships with organizations to reach diverse groups.
The Company is committed to gender and racial pay equity for all employees and has completed its fourth annual pay equity study. As in years past, the Company engaged an external consulting firm specializing in pay analysis to conduct the study. The following are key findings from the 2021 study:
•For all Company locations with 50 or more employees, when comparing pay levels for those in comparable roles, the average female-to-male pay ratio is 99.4%.
•In the United States, when using the same comparisons, the average non-Caucasian-to-Caucasian pay ratio is 100.0%.
We derive a great deal of strength from our globally diverse workforce. We have long been committed to cultivating an inclusive work environment for our employees, and ensuring our businesses are representative of the communities we serve. We will continue to prioritize our efforts in creating and sustaining a culture of diversity, equity and inclusion, both in our workplace and in the communities where we do business.
Human Capital Management. The Board believes that human capital management and succession planning, including diversity, equity and inclusion initiatives, are critical to the Company’s success. Our talent is our key point of differentiation in the market and a foundation of our success. Our investment in attracting, retaining, developing and motivating key talent is vital to the creation and protection of the Company's long-term shareholder value and is a high priority for our Board.
We seek to retain our employees through our culture, competitive compensation and benefits and interesting work experiences with increasing levels of responsibility. We must continue to attract, develop and retain exceptional talent to continue producing innovative solutions for clients. Our focus on employee retention has resulted in a three-year average annual voluntary attrition rate of 6.8% globally.
The Board’s involvement in leadership development and succession planning is ongoing and the Board provides input on important decisions in these areas. The Board, the Human Capital and Compensation Committee and the Nominating and Governance Committee oversee these areas and are regularly updated on key talent indicators for the overall workforce, including recruiting, attrition, engagement and diversity, equity and inclusion.
COVID-19 Employee Safety and Well-Being. We responded to the COVID-19 pandemic with decisive and swift action in 2020 to ensure the safety of our most valuable asset, our employees. Over 95% of our global employees quickly became remote workers, and remote working in several geographies continued to be the norm for 2021. Throughout 2021, we maintained our focus on the physical and mental well-being of our employees. We created and implemented a CareStrategy to ensure a sense of community and enhance collaboration among our global teams while working remotely and social distancing. Our Care Strategy addresses many diverse topics affecting our employees including health and wellness (professionally and personally), how to work effectively in a virtual workplace and how to manage dispersed teams.
For additional information on human capital management, refer to Item 1 of the Company's financial statements in the Form 10-K for the year ended December 31, 2021, as filed with the SEC.
Charitable Giving. We embrace our responsibility as a corporate leader in the communities in which we live and work. The Company participates in charitable activities relevant to our business and linked to our mission, vision and values. The Company and its employees regularly contribute to local, national and regional non-profit organizations that promote health, well-being and support for education in fields that expand the diversity of the talent pool entering the insurance industry. The Company makes contributions directly, but also a portion of those donations come from our Matching Gift Program, which enables employees to donate to the charity of their choice. We also encourage employee volunteerism with employee Volunteer Time Off, partnering with community service organizations to provide opportunities for employees to donate time and talents to assist neighbors in need.
In 2016, the Company established the RGA Foundation to participate in charitable giving activities worldwide in the cities and regions where we are an active member of the community and in causes relevant to our business and linked to our mission, vision and values. The RGA Foundation funds charitable grants related to priority areas, which include advancements in health, longevity, medical and mathematical education, community programs and disaster relief.
Industry Advancement. We believe strongly in the power of shared knowledge. Our employees are known industry-wide for leadership in industry organizations. The Company regularly releases research to advance the understanding of risk and improve the actuarial, underwriting and claims disciplines.
The Company is a co-founder of the Longer Life Foundation ("LLF"), a non-profit corporation, with Washington University in St. Louis. Each year, LLF provides grants to support innovative independent research by scientific, medical and public health experts working to make discoveries that will improve long-term mortality, enhance longevity and promote healthier lives.
In the two decades since its inception, the LLF has funded more than 120 research projects, many of which expanded clinical knowledge in fields as diverse as longevity, genomics, obesity, older-age cognition, heart disease and cancer. More than 150 publications by LLF-funded researchers have been published in peer-reviewed scientific journals. The LLF is distinctive as an academic-corporate initiative to support fully independent research, the results of which are published for the benefit of the entire medical community.
The LLF advisory group comprises diverse university physicians and researchers, as well as medical directors and underwriting experts from the Company and other life insurance organizations; these individuals evaluate grant proposals and make recommendations to the foundation's Board of Governors for approval.
Data Privacy & Information Security. Our Board recognizes the importance of maintaining the trust and confidence of our clients, business partners and employees. As part of its objective, independent oversight of the key risks facing the Company, the Board devotes significant time and attention to data privacy, data and systems protection, including cybersecurity and information security risks. The Board and its Cyber & Technology subgroup oversee management's approach to policies, processes and practices sufficient to gauge and address data, cybersecurity and information security risks effectively.
In 2021, the Company established a Data and Analytics Ethics Framework and Guiding Principles and an oversight board to guide and oversee emerging issues in data and analytics ethics. This framework and board will be an important part of the Company’s ability to make ethical decisions about how data and analytics processes should be used to protect personal data and avoid unfair discrimination or improper use of data beyond what local regulations might dictate.
Governance
We believe that sound principles of corporate governance are a key element of our business, and the Board of Directors is deeply involved in providing continuing insight and clarity into our governance process. We expect all directors, officers and employees to conduct business in compliance with the various corporate governance documents and policies we have implemented and we survey compliance on an annual basis.
Board Structure and Composition. We believe that the structure, practices and composition of our Board enhances effectiveness. Our directors reflect a diverse set of experiences and skills that are relevant to our industry and long-term business strategy. 92% of the members of our Board are independent, 38% are female and 23% are racially or ethnically diverse (based on U.S. standards). Women serve in leadership roles as the chair of three (out of five) of the Board's standing committees. All the members of our Board stand for election annually, with a majority voting standard in uncontested director elections.
Governance Practices. Our approach to corporate governance integrates numerous effective components of good governance practices, including a strong ethical culture, a comprehensive enterprise risk management program, an ongoing shareholder engagement program, sound financial, regulatory and legal compliance functions and corporate social responsibility. Our governance strategy focuses on delivering long-term shareholder value. For more information on our governance practices, see "Corporate Governance - Overview" above.
Board Evaluations and Assessments. The Nominating and Governance Committee supervises the Board's self-evaluation assessment and annual review of director independence. The assessment is usually developed internally with a typical structure focused on two sections: an "inward-looking" section, in which directors respond to questions directly relating to their roles on the Board; and an "outward-looking" section, which involves questions relating to the Board as a whole. After receiving a summary of the assessment results, our Board Chair conducts individual interviews with each director to discuss responses, recommendations and concerns. This also allows directors an opportunity to raise sensitive subject matters in discussions with the Chair.
In certain years, an independent consultant is engaged to perform the assessment. In 2021, an independent consultant was engaged for this purpose and at the Board’s request, the assessment included a specific focus on the Board’s overall effectiveness, the functioning of the committees, and the contributions of each of the Board members. The robust process included development of interview questions, observation of Board and committee meetings, individual director interviews (including a peer review component), individual interviews of the executive management team, individual director feedback on the peer review component and a detailed final report with specific governance observations and recommendations. The Board will continue implementation of the recommendations throughout 2022.
Responsible Investing
RGA’s ESG investment philosophy is being integrated into all of our investment decisions to reflect our company purpose, values, commitments, and belief that we have a responsibility to care for the long-term health and financial security of diverse communities and the environment. We take a sector-by-sector and investment-by-investment approach in order to partner with our investees’ not only to evaluate their current ESG activities, but also their efforts to transition to more sustainable impacts. The Company also believes long-term sustainability matters impact both investors and society and thus should be considered when making investment decisions.
When making real estate investments, the Company employs a disciplined process that seeks to uncover opportunities, evaluate potential risks and effectively mitigate any risk to meet our investment objectives. ESG analysis is incorporated into our underwriting process when evaluating new commercial real estate mortgage and equity investments, as well as for monitoring throughout the lifecycle of each investment. Environmental assessments are conducted for each commercial property to detect any existing or potential future environmental, health or safety issues. Including ESG considerations as part of our underwriting and due diligence process results in higher quality investments and generates greater risk-adjusted returns.
As part of the Company’s commitment to social responsibility and environmental sustainability, we are committed to continuing and expanding socially and environmentally responsible investment policies within our investment portfolio and will look at other ways that our investments can help support healthier and more sustainable communities.
SHAREHOLDER ENGAGEMENT
Fostering long-term and institution-wide relationships with shareholders and maintaining their trust and goodwill is an important objective for our Company. We are committed to engaging in constructive and meaningful dialogue with our shareholders. We value shareholder views and insights and believe that positive, two-way conversation builds informed relationships that promote transparency and accountability.
To ensure that our Board and management understand and address the issues that are important to our shareholders, the Company has an ongoing proactive practice of discussing issues such as corporate strategy and financial performance, governance, executive compensation, social and environmental matters, as well as other important topics with significant shareholders. We consider feedback when gauging whether any changes are necessary to ensure that the Company is in line with market practice and guidelines. Depending on the topic, such discussions may include our President and CEO, Chief Financial Officer, Investor Relations Officer, General Counsel or other key members of management.
In 2021, our Investor Relations function conducted these meetings virtually throughout the year. Feedback and input from our investors is formally reported to the Board on a quarterly basis. In the first quarter of 2021, a special shareholder outreach program was conducted to provide an opportunity to review and discuss decisions made by the Human Capital and Compensation Committee in response to the significant adverse impact of COVID-19 claims on the Company’s 2020 financial results and incentive compensation programs. With assistance from a third-party governance advisor, the Company offered engagement to approximately 25 investors and held video calls with those who accepted the offer to engage. The investor feedback from those meetings was shared with the Board and the Human Capital and Compensation Committee at subsequent meetings.
POLITICAL CONTRIBUTIONS
We have established policies and procedures governing the political activities of the Company and the political action committee sponsored by our Missouri operating company, RGA Reinsurance Company. Due to our position as a leading U.S.-based reinsurer in the global life and health reinsurance industry, we actively follow state, federal and international legislation and regulation. On both the state and federal levels, we actively participate in lobbying in the interest of protecting the rights of
reinsurance companies and in the pursuit of staying competitive in global markets. Internationally, we work with our trade associations to follow and address issues regarding market access and trade, data transfer and other issues that impact the manner in which we do business in foreign jurisdictions.
Like many large organizations, we have a federal political action committee, created and administered under applicable federal law. RGA Reinsurance Company sponsors the RGA Reinsurance Company Federal Political Action Committee ("RGA PAC"), a non-partisan PAC formed under the federal election laws, which makes contributions to individual candidates pursuant to federal election laws. In appropriate circumstances the RGA PAC may also make contributions to the federal political action committees of industry trade associations in which the Company participates. All contributions are made with the Company's strategic goals in mind and are intended to support candidates and issues that are important to the Company and our clients.
The board of the RGA PAC is comprised of Company employees who are members of the RGA PAC. The RGA PAC board regularly reviews the Company's political and lobbying policies and reports of political contributions. The RGA PAC board is advised of the Company's ongoing political strategy as it relates to overall public policy objectives for the next year and provides guidance to the RGA PAC. The RGA PAC files contributions and expenditure reports with the Federal Elections Commission, pursuant to federal regulations.
Under United States federal law, the Company may not contribute corporate funds or make in-kind contributions to candidates for federal office or to national party committees. In addition, our Code of Conduct ensures that no Company funds or assets are used for any candidate or nominee for political office, or for any political party or committee, except in compliance with specific Company policies and all applicable laws and regulations. When permitted, the Company makes political contributions to insurance and reinsurance trade associations that are permitted to contribute to individual candidates at the state level who understand the issues most important to us and our clients. We are generally not permitted to make political contributions to candidates for public office in foreign countries and therefore, we do not make any such contributions.
COMPENSATION DISCUSSION AND ANALYSIS Our executive compensation program is designed to attract, motivate and retain the senior level employees who direct and lead our business and to appropriately reward these individuals for superior financial performance.their contribution to the business. Our Board of Directors has delegated to the Human Capital and Compensation Committee (the "Committee") the authority to establish and oversee our general compensation program, review the performance and approve the compensation of our Chief Executive Officer and review and approve the compensation of the other named executive officers and members of our senior management. The Compensation Committee also reviews and approves this Compensation Discussion and Analysis on("CD&A") regarding executive compensation for inclusion in this Proxy Statement (the "CD&A").Statement. During 2015,2021, the Compensation Committee consisted of Messrs. Danahy (Chairman)Mses. McNeilage (Chair), Eason,Albo and Detrick, and Messrs. Sievert and Tulin and Ms. Phillips.Thomas.
The discussion of our compensation practices and related disclosures focusfocuses on the compensation of our named executive officers. This discussion is divided into the following sections:
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| Compensation Disclosure Sections |
Overview2021 COVID-19 Impact and Paying for Performance | |
| Overview of Compensation Practices | |
| Five Elements of Compensation | |
| Executive Compensation Process | |
2015 | |
| Committee Report | |
| Executive Compensation Tables | |
| Other Executive Compensation Matters | |
OVERVIEW
2021 COVID-19 IMPACT AND PAYING FOR PERFORMANCE
2021 Company Performance
2021 represented a marked acceleration of the COVID-19 pandemic; on a global basis there were 3.6 million COVID-19 related deaths in 2021, compared to 1.9 million in 20201. While the Company’s business remains resilient and 2021 featured many achievements that position us strongly for continued success, our 2021 financial results reflected this adverse pandemic trend.
After $590 million in estimated COVID-19 related impacts in 2020, RGA absorbed additional COVID-19 impacts of more than $1.4 billion2 in 2021. Despite the magnitude of this impact, the underlying strength of our business allowed RGA to produce meaningful earnings and, more importantly, enabled our client partners to support their policyholders amid widespread uncertainty and loss.
The following table summarizes financial results for 2021 and 2020, including the estimated impact of COVID-19 on the 2021 results:
| | | | | | | | | | | | | | |
| 2021 Results | COVID-19 Impact included in 2021 Results2 | 2020 Results | COVID-19 Impact included in 2020 Results |
Pre-tax adjusted operating income3 | $121 million | $1.4 billion | $627 million | $590 million |
Adjusted operating income per share3 | $1.13 | $15.20 | $7.54 | $6.80 |
Trailing 12 month adjusted operating return on equity3 | 0.8% | 10.1% | 5.7% | 5.0% |
1Source: Our World in Data as of March 16, 2022, https://ourworldindata.org/explorers/coronavirus-data-explorer?zoomToSelection=true&time=2020-03-01..latest&facet=none&pickerSort=desc&pickerMetric=total_deaths&Interval=Cumulative&Relative+to+Population=false&Color+by+test+positivity=false&country=~OWID_WRL&Metric=Confirmed+deaths |
2COVID-19 impact estimates include mortality and morbidity claims of approximately $1.4 billion with offsetting impacts from longevity of approximately $54 million; tax effected at 24%. |
3See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
In addition to delivering strong profitability, excluding COVID-19 impacts, the Company generated significant achievements in a variety of areas which are expected to deliver future profitability, including:
•Record premium income for 2021 of $12.5 billion, an increase of 7% over 2020, which in turn represented an increase of 4% over 2019.
•A substantial volume of attractive new business, both flow business and block transactions. The estimated value of future profits from 2020 and 2021 new business totals over $1.5 billion.
•In an environment of record low interest rates, repositioning of the investment portfolio to enhance yields within appropriate risk parameters.
•Proactive capital management actions to enhance resilience and flexibility.
•Continued strengthening of client relationships, through delivering substantial intellectual capital with respect to the impact of COVID-19, and working very closely with clients to help them address these impacts.
Pay for Performance in 2021
As the pandemic unfolded in 2020 and 2021, it became clear that the Company’s financial performance was significantly impacted. The Committee evaluated several options, including making changes to incentive structures following the onset of the pandemic. These evaluations were grounded in the Company’s “pay for performance” philosophy and were undertaken to ensure that the Company’s compensation program serves the best interests of the Company’s shareholders. The Committee also considered the significant and continuing uncertainty regarding the path of the COVID-19 pandemic. The Committee decided that no adjustments would be made to any existing long-term incentive.
Additionally, as discussed further below:
•Salaries and incentive targets for senior executives were held flat in 2021.
•The 2020 and 2021 ABP results both paid out below target, at 80% and 81.1% of target, respectively.
•As a result of the pandemic, the impact to open PCS cycles was as follows:
2015 | | | | | |
| PCS Grant Cycle | Actual or anticipated payout |
| 2018 – 2020 cycle | 0% payout |
| 2019 – 2021 cycle | 0% payout |
| 2020 – 2022 cycle | 0% anticipated payout |
•The net impact to realizable compensation (discussed further below) was to eliminate the contribution from all equity-based compensation granted since 2018.
•As disclosed in the proxy statement for last year’s annual meeting of shareholders, the supplemental equity awards made to executives were special, one-time grants. No such grants were made in 2022.
Throughout 2021, the Committee monitored the impact of the COVID-19 pandemic on the Company’s financial results and related compensation plans to understand the impact on expected compensation outcomes across the employee base, while also reviewing the substantial achievements driven by employee actions (as discussed above). Equity awards granted prior to 2021:
•were designed around absolute financial metrics;
•did not include metrics comparing the Company’s financial results to those of its peers;
•featured relatively narrow ranges between minimum, target and maximum payout thresholds for the financial metrics that determine payouts; and
•excluded purely time-based equity.
Additionally, prior to 2021, the Company’s equity awards were either appreciation only-vehicles (i.e., SARs), or were performance-vested PCS awards. The PCS awards have historically represented 75% of equity grants for named executive officers and were constructed using cumulative financial metrics over a three-year period. Thus, poor performance in a single year significantly reduces or eliminates the value of awards granted in three separate awards cycles.
The Committee believes, based on advice received from its independent compensation consultant Meridian Compensation Partners, that the Company’s equity compensation program prior to 2021 included a higher percentage of performance-vested awards as compared to the Company’s peer group on average. Moreover, because the PCS program currently has no relative performance measurement component, any out-performance compared to peers or industry would not be captured
in PCS payouts. The Committee believes that one-time action by the Committee in 2021 was necessary because the combination of these design elements and the impact of the COVID-19 pandemic disproportionately affects employee compensation in a situation where employee actions delivered business resilience and positioned the Company for continued profitability. Absent appropriate action, this may negatively impact employee engagement and create talent retention issues and business continuity concerns.
The Committee decided that it would make no change to any prior equity awards granted as such modifications would not be consistent with our compensation philosophy. However, the Committee determined that some adjustment to the 2021 equity compensation was warranted based on:
•the uncertainty related to the length of the business recovery for the life reinsurance industry,
•the zero payout under the 2020 PCS awards,
•that the Company estimated with a high degree of confidence that payouts for the PCS cycles ending in 2021 would be zero; that estimate turned out to be correct;
•that the Company estimates with a high degree of confidence that payouts for the PCS cycles ending in 2022 will also be zero, and
•that these PCS awards have historically comprised 75% of equity for our named executive officers.
The Committee believes these compensation actions will foster the Company’s culture of trust and equity, which is considered instrumental in motivating Company employees to contribute to the Company’s future success, including continued navigation through the COVID-19 pandemic.
The actions taken by the Committee with respect to the Company’s five elements of compensation for 2021 are as follows:
Compensation Element #1 – Base Salary
The Committee determined that no merit increases to base salary for senior executives, including the Company’s named executive officers, were to be paid in 2021.
Compensation Element #2 – Annual Bonus Plan
In March 2021, the Committee approved performance goals and business criteria for the Company, including minimum, target and maximum ABP opportunities. The performance goals established by the Committee were meant to require substantial efforts by our management team toward our strategic goals, but as the same time they were intended to be within reach if such efforts are made, and also provide additional rewards for extraordinary achievement. The Company’s overall results were below the target established by the Committee:
| | | | | | | | |
| Annual Bonus Plan (based only on overall Company performance) |
| Metric | Actual Results | Bonus as a Multiple of Target |
Adjusted Operating Income Per Share - Annual Bonus Plan1 | $(1.18) | 0% |
| Strategic Scorecard | 3.79 / 5 | 140% |
| New Business Embedded Value | $756.5 million | 180% |
Annual Adjusted Consolidated Revenue1 | $16.7 billion | 200% |
| Payout | 81.1% |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
An adjustment to ABP results in the EMEA and Asia Pacific business units, resulted in an additional $1.7 million allocated to employees in these business units because of the outsized impact that results in South Africa and India had on segment results.
Compensation Element #3 – Performance Contingent Awards
The Company’s performance contingent share (“PCS”) program represents a significant portion of target compensation for the Company’s named executive officers and for other executives. As described below, payouts under each PCS award are determined by Company financial performance over a three-year period. Notwithstanding solid financial performance in 2018 and 2019, the PCS awards that vested in 2020 had a zero payout due to the impact of the COVID-19 pandemic on the Company’s financial metrics in 2020.
| | | | | | | | |
| 2018-2020 Performance Contingent Share Program |
| Metric | Actual Results | % of Target Payout |
Three-Year Adjusted Operating Return on Equity1 (33.5%) | 8.9% | 0% |
Three-Year Adjusted Operating Income1 ($M) (33.5%) | $2,138.2 | 0% |
Three-Year Book Value Per Share, excluding AOCI1 (33.0%) | $130.60 | 0% |
| Payout | 0% |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
Additionally, the PCS awards that vested in 2021 also had a zero payout due to the impact of the COVID-19 pandemic on the Company’s financial metrics in 2020 and 2021.
| | | | | | | | |
| 2019-2021 Performance Contingent Share Program |
| Metric | Actual Results | % of Target Payout |
Three-Year Adjusted Operating Return on Equity1 (33.5%) | 5.7% | 0% |
Three-Year Adjusted Operating Income1 ($M) (33.5%) | $1,268.7 | 0% |
Three-Year Book Value per Share, Excluding AOCI1 (33.0%) | $135.71 | 0% |
| Payout | 0% |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
2020-2022 PCS Awards. Given that the PCS performance measures are cumulative over the three-year period, the Company estimates with a high degree of confidence that the 2021 and 2020 financial results also eliminate the possibility of any future payments under the PCS awards granted for the 2020-2022 performance period.
2021 Special One-Time Award. As disclosed in the proxy statement for the previous annual meeting of shareholders, in March 2021 the Committee determined that a one-time equity award to named executive officers and other executives was necessary for the engagement of our executive team to advance our strategic objectives and to recognize the performance of our leaders in navigating the Company through the COVID-19 pandemic. Absent this additional one-time equity award, the impacts to total realized compensation on the Company’s executive officers are material and long-lasting, presenting significant challenges in the retention and engagement of key talent, as demonstrated below under “Realizable CEO Pay”. The Committee believes that this one-time grant better aligns pay and performance for our executives. The total value of the PSU awards granted (both to named executive officers and other executives) was approximately $8 million.
Annual PCS Awards. In March 2021, the Committee changed the time period for measurement of PCS performance metrics for the 2021 grants. Rather than measuring Company financial performance on a cumulative basis over a three-year period as done with previous grants, specific financial performance metrics were established for each of 2021 and 2022, with 2023 serving as an additional time vesting period. For 2022 grants, the Company will resume measuring financial performance over a three-year period. Additionally, the Committee has added a Relative Total Shareholder Return modifier for the 2022 PCS awards, recognizing the prevalence of relative total shareholder return metrics among the Company’s peers and the importance of measuring the Company's performance against its peers.
The Company's Relative Total Shareholder Return ranked against an established group of companies will modify the results of the PCS metrics up or down by a maximum of 10%.
Compensation Element #4 – Stock Based Awards
As disclosed in the proxy statement for the previous annual meeting of shareholders, in addition to the special one-time awards described above, the Committee made a one-time grant to certain executives of RSUs. The RSU awards will fully vest (i.e., “cliff vest”) for individuals employed with the Company on December 31, 2022 and pay out in shares of the Company’s common stock. The total value of the RSU awards granted (both to named executive officers and other executives) was approximately $44 million.
Compensation Element #5 – Retirement and Pension Benefits
The Committee took no action with respect to retirement and pension benefits as a result of the COVID-19 pandemic.
Realizable CEO Pay
By design, Company executives do not realize the full value of their target total direct compensation opportunity unless the Company meets or exceeds critical financial and strategic objectives, and the Company’s stock price appreciates. The Committee believes Ms. Manning’s realizable compensation (as defined below) more accurately describes the compensation she actually receives, as compared to the amounts in the Summary Compensation Table and Outstanding Equity Awards at 2021 Year End Table, because such tables do not take into account the actual or expected payouts of equity awards.
Ms. Manning became CEO in 2017. If Ms. Manning did not receive the special one-time equity award granted in 2021, her average realizable compensation would be 54% of target compensation over this five-year period. Including the special one-time equity award, her average actual realizable compensation was 59% of target over the same period. While the one-time grant only modestly increased Ms. Manning’s realizable compensation as compared to target during her tenure as CEO, the Committee believes the grant was appropriate because of:
•the Company’s strong economic performance prior to the COVID-19 pandemic, the results of which were negated in performance-based long-term incentive awards that would have paid-out during the pandemic;
•Ms. Manning’s leadership during the COVID-19 pandemic, which helped the Company generate meaningful new business during the pandemic and strongly positions the Company for future success;
•the Committee’s recognition that the design of certain elements of the Company’s incentive compensation program (e.g., using absolute financial metrics, not comparing results to Company peers, and relatively narrow ranges between minimum, target and maximum payout thresholds for the financial metrics that determine payouts) did not fairly compensate employees during stress scenarios such as a pandemic; and
•the desire to retain Ms. Manning and other senior executives receiving the special one-time equity award.
The following table displays Ms. Manning’s target total direct compensation and realizable compensation for the prior five-year period. “Target total direct compensation” is comprised of:
•base salary;
•annual bonus plan (ABP) grants;
•restricted share unit grants;
•performance contingent awards grants; and
•stock appreciation rights grants.
“Realizable compensation” is comprised of:
•actual annual base salary received;
•ABP payouts received; and
•the estimated value of vested and unvested equity awards as of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| REALIZABLE CEO PAY |
| Target Total Direct Compensation | Realizable Compensation1 |
| Year | Base Salary | Target Bonus $ | Target LTI | One-Time LTI | Target Total Compensa-tion | Base Salary | Bonus Payout | Realizable/Realized Regular LTI | One-Time LTI (Unvested) | Actual Total Compensa-tion |
| 2021 | $1,030,000 | $1,854,000 | $5,750,000 | $7,000,000 | $15,634,000 | $1,030,000 | $1,504,315 | $3,660,141 | $5,940,927 | $12,135,383 |
| 2020 | $1,030,000 | $1,854,000 | $5,750,000 | $0 | $8,634,000 | $1,030,000 | $1,390,500 | $0 | $0 | $2,420,500 |
| 2019 | $1,030,000 | $1,545,000 | $4,500,000 | $0 | $7,075,000 | $1,025,385 | $2,144,954 | $0 | $0 | $3,170,339 |
| 2018 | $1,000,000 | $1,500,000 | $3,750,000 | $0 | $6,250,000 | $992,308 | $1,308,840 | $0 | $0 | $2,301,148 |
| 2017 | $950,000 | $1,235,000 | $3,245,000 | $0 | $5,430,000 | $950,000 | $2,400,574 | $2,107,976 | $0 | $5,458,550 |
| Avg. 2017 - 2021 | $1,008,000 | $1,597,600 | $4,599,000 | N/A | $8,604,600 | $1,005,539 | $1,749,837 | $1,153,623 | N/A | $5,097,184 |
| | | | | | | | | | |
1The estimated current value of vested and unvested equity awards granted from 2017 through 2021, calculated as follows: |
| ● | Vested/exercised stock options and PCS units are valued at time of vesting or exercise, using a performance factor of 131.5% for the completed 2017-2019 cycle, and a factor of 0% for the 2018-2020 and 2019-2021 cycles. PCS payouts include reinvestment of additional units received as dividend-equivalents. |
| ● | Unvested/unexercised stock options are valued using $109.49, the closing price of RGA's shares on December 31, 2021. |
| ● | Open-cycle performance contingent awards are included assuming 0% forecast payouts for the for the 2020-2022 cycle, 100% for the 2021-2022 special one-time PSU cycle, and 100% for the 2021-2023 PCS cycle. |
OVERVIEW OF COMPENSATION PRACTICES
2021 Named Executive Officers
Choosing the right leadership for the Company is among the Board's most important responsibilities and both the Board and the Committee are committed to ensuring the Company's leadership team has the right talent, with compensation programs aligned to our strategy and pay aligned to performance and the creation of long-term shareholder value. For 2021, our named executive officers were as follows:
| | | | | |
| 2021 NAMED EXECUTIVE OFFICERS |
| |
| Name | Title |
A. Greig WoodringAnna Manning | Chief Executive Officer since December 1, 2015
President and Chief Executive Officer from January 1, 2015 to November 30, 2015 |
Jack B. LayTodd C. Larson | Senior Executive Vice President, and Chief Financial Officer |
Anna ManningLeslie Barbi | President since December 1, 2015
Senior Executive Vice President, Structured Solutions from January 1, 2015 to November 30, 2015
Chief Investment Officer |
| Tony Cheng | Executive Vice President, Head of Asia, Australia and EMEA |
| Ronald Herrmann | Executive Vice President, Head of U.S. and Latin American Markets |
| Alain P. Néemeh | Former Senior Executive Vice President, Global Life and Health Markets |
Donna H. Kinnaird | Senior Executive Vice President and Chief Operating Officer |
Ron Herrmann joined RGA in November 2020 in the role of Executive Vice President, U.S. and Latin American Markets. He oversees U.S. Mortality Markets, U.S. Individual Health, U.S. Group Reinsurance and Latin America. He is also a member of the RGA Executive Committee.
Effective September 23, 2021, due to restructuring of certain senior executive responsibilities, the role of Senior Executive Vice President, Chief Operating Officer held by Alain P. Néemeh was eliminated. As a result of this restructuring, Mr. Néemeh is no longer employed by the Company.
Our Compensation Philosophy and Objectives
The philosophy and objectives of our executive compensation programs are to:
Create•create incentives that will focus executives on, and reward for, increasing long-term shareholder value;
Reinforce•reinforce our pay for performance culture by making a significant portion of compensation variable and based on Company and business unit performance;
Align•align the long-term financial interests of our executives with thatthose of our shareholders through equity-based incentives and by building executive ownership in the Company; and
Provide•provide competitive total compensation opportunities that will attract, retain and motivate high-performing executives.
We use financial
In 2021, we used the following performance measures that focus on revenue, to determine incentive compensation payouts under our Annual Bonus Plan:
•adjusted operating income per share;
•strategic scorecard;
•new business embedded value,value; and
•adjusted operating income per share,revenue.
For the 2021 ABP, the Committee replaced the book value per share operating return on equity, relative return onexcluding AOCI metric with a strategic scorecard. The scorecard is designed to assess performance in select key focus areas for 2021, including, but not limited to:
•strategy;
•expense and headcount management;
•cybersecurity;
•diversity, equity and cumulative revenue growth rate. Our annual bonus planinclusion; and performance contingent share
•environmental, social and governance.
For the 2021-2023 PCS program, are tied tothe Committee established specific financial and operating performance metrics for each of 2021 and our2022; with 2023 serving as an additional time vesting period. PCS grants prior to 2021 measured financial performance over a three-year period, but due to the global pandemic,
the uncertain business environment and pending GAAP changes due to Long Duration Targeted Improvements (LDTI), the Committee altered the measurement period for the 2021 grants only. The grants made in March 2022 for the 2022-2024 PCS program returned to measuring financial performance over a three-year period.
Our grants of stock appreciation rights and restricted stock units are tied to the performancemarket price of the Company's stock price. This approach aligns our executive compensation program to our business strategies, reinforces our pay-for-performance culture by using variable compensation based on performance and aligns the long-term financial interests of our executives with the interests of our shareholders. common stock.
Our Compensation Program and Governance Reflects Best Practices
We have designed our compensation program to drive performance toward achievement of our short, intermediate and long-term goals and to increase long-term shareholder value, while appropriately balancing risk and reward. We regularly review our program to incorporate bestappropriate compensation practices, such aswhich currently include the following:
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| | | | |
| What We Do |
| ü | Pay-for-Performance. We have a pay-for-performance executive compensation structure that provides an appropriate mix of short, intermediate and long-term performance incentives, with emphasis on the creation of shareholder value. Our executive compensation is closely aligned with financial performance because the majority of the total compensation for our executives is earned only upon the achievement of corporate, business unit and/or individual performance goals. Other than base salary, we do not provide any fixed compensation. |
| ü | Use of Multiple Financial Performance Metrics. OurIn 2021, our incentive compensation programs utilizeutilized multiple financial performance metrics, including revenue,adjusted operating income book value andper share, new business embedded value and adjusted operating revenue for our Annual Bonus Plan and cumulative revenue growth rate,adjusted operating return on equity, adjusted operating income and relative return on equitybook value per share excluding AOCI for our Performance Contingent Shares. These financial metrics are focused on performance and creation of long-term shareholder value. |
| ü | Compensation Benchmarking.Benchmarking with Reference to Median. The Compensation Committee reviews publicly available information of peer companies to evaluate how our named executive officers’officers' compensation compares to executives in similar positions at other companies and considers that information when establishing compensation. In most markets, we align our executive compensation target levels with the market median in order to retain current talent and attract new talent. |
ü
| Compensation Recoupment Policy.We have an Executive Incentive Recoupment Policy which permits the Company to recoup all or a portion of an incentive award paid to certain executives upon the occurrence of a specified recoupment event,events, including a financial restatement.restatement and misconduct. We have incorporated the provisions of this policy into our incentive plans.Flexible Stock Plan and award agreements. |
| ü | Stock Ownership Guidelines.To further align the long-term interests of our executives and our shareholders, we have robust stock ownership requirements for our executive officers. For additional information, see "Stock Ownership - Executive Stock Ownership Guidelines." |
| ü | Independent Compensation Consultant. The Compensation Committee benefits from its use of an independent compensation consulting firm which provides no other services to the Company. |
| ü | Committee Discretion. The Committee has discretion to increase, reduce or eliminate any Annual Shareholder "Say on Pay." Because we value our shareholders’ input on our executive compensation programs, our Board has chosen to provide shareholders with the opportunity each year to vote to approve, on a nonbinding, advisory basis, the compensation of the named executive officers in our proxy statement.Bonus Plan incentive award. |
| ü | Compensation Committee Discretion.Programs Designed to Manage Dilution Efficiently. We givedesign our Compensation Committee full discretionlong-term incentive programs to reduce or eliminate any cash incentive award.manage dilution through the use of stock-settled stock appreciation rights and net-settled options.
|
| ü | Shareholder Value. We design our equity compensation programs to appropriately balance short, medium and long-term focus on key drivers of shareholder value creation. |
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| | | | |
| What We Don't Do |
| X | No U.S. and Canadian Employment Contracts. We do not have any employment or contractual pre-employment severance agreements for our executivesU.S. and Canadian named executive officers and we only offer limited benefits on termination of employment. |
| X | NoLimited Perquisites. We do not offer our executives personal-benefitpersonal benefit perquisites, such as aircraft, cars or apartments and we do not reimburse our executives for personal benefit perquisites such as club dues or other social memberships, except in some foreign countries where such perquisites are required to maintain a local competitive position.
|
| X | No Preferential Payments. We do not pay preferential or above market returns on executive deferred compensation. |
| X | Limited Benefits Upon Change in Control. We have limited benefits upon change in control and our Flexible Stock Plan includes a double-trigger for the acceleration ofdoes not require that awards automatically accelerate upon a change in control. |
| X | No Repricing of Grants. Our Flexible Stock Plan prohibits repricing for underwater stock options and stock appreciation rights. |
| X | No Golden Parachutes or Gross-Ups. We do not have any golden parachute agreements or tax gross-ups for severance payments with our executives. |
| X | No Speculative Trading. Our Insider Trading Policy prohibits employees and directors from short-selling Company stock, buyingsecurities, and strongly discourages the use of margin accounts, standing and limit orders or selling puts and calls of Company stock, or engaging in any other transaction that reflects speculation aboutwhere there is no control over the Company’s stock pricetiming of purchases or that might place their financial interests againstsales which could result in a trade occurring at a time when the financial interestsemployee is aware of the Company.material non-public information or otherwise not permitted to trade. |
| X | No Unapproved Hedging. Our Insider Trading Policy prohibits employees and directors from engaging in hedging or monetization transactions,of Company securities, which can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards,forward contracts, equity swaps, collars and exchange funds. Exemptions to this general banprohibition may be sought from the General Counsel on a case-by-case basis and will beare subject to pre-clearance procedures.pre-clearance. |
| X | Pledging Discouraged. Our Insider Trading Policy strongly discourages employees and directors from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. |
Say on Pay Feedback from Shareholders
A primary focus of our Compensationthe Committee is whether the Company’sCompany's executive compensation program serves the best interests of the Company’sCompany's shareholders. At the Company’s 2015Company's 2021 Annual Meeting, a significant majority (98.3%our shareholders cast 95% of votes cast on the proposal)in support of our shareholders approved the compensation program described in the proxy statement for that meeting. This is consistent with our shareholder feedback on executive compensation at our previous annual meetings:
|
| |
| Annual Meeting Year | Percentage of Votes Cast in Favor of "Say on Pay" |
| 2015 | 98% |
| 2014 | 97% |
| 2013 | 99% |
| 2012 | 96% |
| 2011 | 92% |
| | | | | |
| Annual Meeting Year | Percentage of Votes Cast in Favor of "Say on Pay" |
| 2021 | 95% |
| 2020 | 98% |
| 2019 | 98% |
| 2018 | 98% |
| 2017 | 98% |
| Five Year Average | 97.4% |
As part of its ongoing review of our executive compensation program, the Compensation Committee took the votes into consideration, along with an overall review of the compensation program, when making compensation decisions for 20152021 and 2016. The Compensation Committee determined that the Company’s executive compensation philosophy, objectives and elements continue to be appropriate.2022.
Five Elements of Compensation
Our executive compensation program consists of the following five elements: |
| | |
Element of Compensation | Purpose |
1. | Base Salary | Our base salaries are designed to provide a competitive component of the total compensation package that will attract, retain and motivate high-performing executives. Adjustments to base salary are made periodically to recognize competitive changes and personal performance. |
2. | Annual Bonus Plan | Our Annual Bonus Plan ("ABP") awards are designed to reinforce our pay-for-performance culture and align incentive compensation with our short-term business strategies by making an executive's entire ABP award variable and based on Company, business unit and/or individual performance. |
3. | Performance Contingent Shares | Our Performance Contingent Share ("PCS") grants focus participants on our strategic and intermediate-term financial and operating goals. PCS grants are awarded to participants with equity if we achieve the rate of cumulative revenue growth rate, return on equity and relative return on equity measures that are approved each year by the Compensation Committee when it considers annual grants. The PCS grants are ongoing and each year a new three-year cycle begins, giving us the opportunity to review and update performance measures for new grants. The three-year performance and reward period shifts participant focus and effort toward intermediate and longer-term sustained results. |
4. | Stock Appreciation Rights | Stock Appreciation Rights ("SARs") are granted annually, and the number of SARs granted is based on the grant recipient's position within the Company. The vesting schedule for SARs grants is four years, 25% of which vests at the end of each of the first four years. Upon vesting, the SARs are settled in the equivalent value of unrestricted shares of common stock. The SARs expire 10 years after the grant date. |
5. | Retirement and Pension Benefits | Our retirement and pension benefits are designed to provide a competitive level of post-employment income as part of a total rewards package that permits us to attract and retain key members of our management. |
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| | | | |
See "Five Elements of Compensation" (page 23) for additional information. |
Compensation Pay Mix
The following graph demonstrates 20152021 target compensation pay mix by elementselements* for each of our named executive officers:
| | | | | | | | | | | | | | |
| *Calculation excludes pension and retirement benefits. Calculation includes a one-time equity award grant of performance contingent |
| awards ("PSU") and restricted stock units ("RSU") for the named executive officers and other plan participants. Due to the timing of |
| Mr. Herrmann joining the Company, he was not eligible to receive these grants. |
| | | | |
1 Excludes special grants made in December 2015 to Ms. Manning, Mr. Néemeh and Ms. Kinnaird. For additional information see "Additional Named Executive Officer Compensation" below.
|
|
2 Ms. Manning’s compensation mix reflects the amounts she earned while in the position of SEVP, Structured Solutions from January 1, 2015 to November 30, 2015, before becoming President on December 1, 2015. For additional information see "Additional Named Executive Officer Compensation" below.
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Company Performance for 2015
We believe that our compensation philosophy and objectives have resulted in an executive compensation program and decisions that have appropriately incented our executives to achieve our business performance targets, goals and objectives. Our compensation decisions are intended to benefit our shareholders and drive long-term shareholder value. Summarized below are some key highlights of our financial performance for 2015:
Our full year net premiums totaled $8.6 billion in 2015.
| |
• | Our full year earnings per diluted share: operating income1 $8.43, net income $7.46.
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| |
• | Our full year operating return on equity1 was 11% for 2015.
|
Book value per share at year-end 2015 was $94.09 including accumulated other comprehensive income ("AOCI"), and $83.23 excluding AOCI, an 8% increase on a total return basis.
For additional information on our 2015 financial performance, see our 2015 Annual Report on Form 10-K.
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1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
How Our Performance Affected 2015 Compensation
Our emphasis on pay for performance and the alignment of compensation with the creation of long-term shareholder value means that significant portions of the compensation paid to our executives vary based on our corporate performance. Our financial results are reflected in our 2015 compensation
payments, as described below.
Annual Bonus Plan. Payouts were 101.9% of target for our named executive officers. Named executive officer ABP payouts are based on Company operating income per share, book value per share, new business embedded value and total revenue.
| ABP COMPANY-WIDE PERFORMANCE METRICS |
| | | | |
| Metric | Weight | Target | 2015 Result | Performance Level |
Operating Income Per Share1 | 50% | $8.60/share | $8.43/share | 85.8% |
Book Value Per Share Excluding AOCI1 | 25% | $84.76/share | $83.23/share | 82.0% |
| New Business Embedded Value | 15% | $400 million | $610 million | 200.0% |
| Annual Consolidated Revenues | 10% | $10.6 billion | $10.4 billion | 85.8% |
| Weighted Average | | | | 101.9% |
1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
Performance Contingent Share Program. For the 2013-2015 PCS performance period payouts are based on cumulative revenue growth rate, operating return on equity and relative return on equity performance over a three-year period. Our cumulative revenue growth rate and operating return on equity performance for the period resulted in payouts of 0.0% and 55.3% of target, respectively. The relative return on equity measure is dependent upon public availability of financial results from our peer companies. Because of the timing for the availability of this information our performance for the relative return on equity metric will not be approved by the Compensation Committee until late April 2016. Payments for the 2013-2015 PCS grants will not be made until May 2016, after the filing of this Proxy Statement.
| PCS COMPANY-WIDE PERFORMANCE METRICS |
| | | | |
| Metric | Weight | Target | 2015 Result | Performance Level |
| Cumulative Revenue Growth Rate | 33.0% | 8% | 3.5% | 0% |
Three-Year Operating Return on Equity1 | 33.5% | 11.5% | 10.2% | 55.3% |
| Three-Year Relative Return on Equity | 33.5% | 50th | Our performance for the relative return on equity metric for the 2013-2015 PCS grants will not be available until late April 2016. | Our performance for the relative return on equity metric for the 2013-2015 PCS grants will not be available until late April 2016. |
1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
Additional Named Executive Officer Compensation
On December 1, 2015, the Board of Directors appointed Ms. Manning as President of the Company. On such date, Mr. Woodring relinquished the title of President. The Board also announced that Mr. Woodring is expected to retire and relinquish the title of Chief Executive Officer in late 2016, at which time the Board expects to appoint Ms. Manning as Chief Executive Officer. On March 7, 2016, the Board of Directors appointed Todd C. Larson as Senior Executive Vice President and Chief Financial Officer of the Company effective May 1, 2016. On such date, Mr. Lay will relinquish the title of Chief Financial Officer.
In connection with these organizational changes, the following actions were taken:
Manning Offer Letter. Pursuant to an offer letter between the Company and Ms. Manning (the "Offer Letter"), she receives an annual base salary of $750,000 as President effective December 1, 2015,
which will increase to $950,000 upon her expected appointment as Chief Executive Officer. She will continue to participate in the Company’s ABP and her target bonus shall remain equal to 100% of her base salary as President, with potential payouts under this award ranging from zero to $1,500,000. New ABP goals were established for her in her role as President. Upon appointment to the role of Chief Executive Officer, Ms. Manning’s ABP target will increase to 130% of base salary.
The Offer Letter also provides that effective with the 2016 grant, Ms. Manning’s target long-term incentive compensation payout will be a fixed amount of $2,000,000 rather than a percentage of her base salary. Her 2016 grant will be allocated 75% to PCS and 25% to SARs awards. Upon appointment to the role of Chief Executive Officer, Ms. Manning’s long-term incentive program target will be $3,245,000.
Manning SAR Agreement. On December 1, 2015 the Committee awarded an additional grant of SARs to Ms. Manning valued at $3,000,000 (153,453 SARs) that will fully vest on November 30, 2020.
Néemeh and Kinnaird Award Agreements. On December 1, 2015, the Committee granted SARs to Mr. Néemeh valued at $2,000,000 (102,302 SARs), which vest fully on November 30, 2020. On that date the Committee also granted Restricted Share Units to Ms. Kinnaird. Ms. Kinnaird’s grant was valued at $600,000 (6,437 Restricted Share Units) and fully vests on January 11, 2017.
Larson Compensation Arrangements. Effective May 1, 2016, Mr. Larson will receive a salary of $500,000. He will continue to participate in the ABP and his target bonus will be 80% of his base salary beginning May 1. New ABP goals will be established for Mr. Larson as Chief Financial Officer and the amount of the potential payout for 2016 will be prorated for goals and amounts before and after May 1. Mr. Larson will continue to participate in the Company’s long-term incentive program. Effective with the 2016 grant his target long-term incentive compensation payout will be 120% of his base salary. His 2016 grant will be allocated 75% to PCS and 25% to SARs awards.
FIVE ELEMENTS OF COMPENSATION
Compensation Elements
Our compensation program consists of the following five elements:
|
| | | | | | | | | | | | | | | | |
Compensation element | Element | PurposeForm | | How We Determine This AmountKey Features |
| 1. | Base Salary | ● | Our base salaries establish a pay foundation at competitive levels as part of a total compensation package that will attract, retain and motivate talented executives.
Cash | ● | The Compensation Committee considers our executives'Fixed compensation intended to attract and retain top talent. |
| ● | Generally, we target base salary compensation compared to thataround the median of the Pay Level Peer Groupour peer companies, but this varies with individual skills, experience, responsibilities, performance and published surveys.location. |
| ● | The Compensation Committee also reviews the recommendations submitted byNo increase in base salary for any of our Chief Executive Officer for the othersenior executives in 2021, including our named executive officers. |
| ● | Represents approximately 21.2%* of named executive officer target total compensation for 2021. |
| 2. | Annual Bonus
Plan ("ABP") | | Our ABP awards are designed to motivate and reward executives for performance on key financial, strategic and/or individual objectives over the year.Cash | ● | ABP awards for executives are based onServes as an annual performance incentive to achieve established business goals. |
| ● | Tied to one or more of the following factors: overall Company resultsperformance, performance of the participant's division or on a combination of Company, business unit and individual performance results. |
●
| ● | Our ABP program utilizes multiple performance metrics. |
●
| This element of compensation holds our executives accountable for Company performance, with payouts varying from target based on actual performance against pre-established and communicated performance goals. | ● | Target awards for executives are based on competitive market pay data for their position and expressed as a percent of salary.performance. |
| ● | Overall Company operating earnings per share performance must meet certain minimum levels, as determinedPerformance goals established in advance by the Compensation Committee, before any awards are made. |
3. | Performance Contingent Shares ("PCS") | ● | Our PCS program is designedfirst quarter of each year with financial goals of each business unit aligning to focus executives on our strategic and intermediate-term financial and operatingcorporate goals. |
●
| The PCS units are granted at the beginning of the performance period. |
| ● | PCS grants are awardedPayouts range from 0% of target payout to eligible participants200% of target payout, depending on an annual basis with each grant cycle running for three performance years. | ● | The Compensation Committee sets award levels with a minimum level of Company performance that must be met before any payment to the individual can be made, as well as a target and a maximum.performance. |
| ● | The PCS grants are ongoingAnnual Bonus Plan company-wide objectives were measured using the following components: (i) adjusted operating income per share; (ii) strategic scorecard; (iii) new business embedded value; and each year(iv) annual adjusted consolidated revenue. The strategic scorecard is an assessment of performance in select key focus areas for 2021, including strategy; expense and headcount management; cybersecurity; diversity, equity and inclusion; and environmental, social and governance. |
| ● | Represents approximately 20.6%* of named executive officer target total compensation for 2021. |
| | | | | | | | | | | | | | | | | |
| 3. | Performance
Contingent
Awards | Equity | ● | Serves as a newperformance incentive to achieve established long-term financial measures and align our executives' interests with those of our shareholders. |
| ● | Performance goals established at the beginning of each three-year cycle begins, giving us the opportunity to review and update performance measures for new grants.fully vest after three years. |
| ● | If we do not meet minimum performance goals, the awards will not be made, and if we exceed those performance goals, the award can be as much asPayouts range from 0% of target payout to 200% of target payout, depending on Company performance. |
| 2021 |
| ● | Due to the targeted award opportunity.impact the COVID-19 pandemic on the Company’s 2021 financial results, Company financial performance for the 2019-2021 performance contingent share (“PCS”) performance period was below the threshold required for payment with respect to each of the three metrics, resulting in a zero payout overall. |
| ● | The Human Capital and Compensation Committee (the "Committee") changed the time period for measurement of PCS performance metrics for the 2021 grants. Rather than measuring Company financial performance on a cumulative basis over a three-year period as done with previous grants, specific financial performance metrics were established for each of 2021 and reward period shifts participant focus2022, with 2023 serving as an additional time vesting period. |
| ● | Beginning in 2021, PCS grants represent 50% of long-term incentive compensation granted to named executive officers. |
| ● | The Committee authorized a one-time equity award grant of performance share units ("PSU") for the named executive officers and effort toward intermediateother plan participants. |
| ● | Performance contingent awards represented approximately 29.1%* of named executive officer target total compensation for 2021. |
| 2022 |
| ● | As a result of: (i) the COVID-19 pandemic’s impact on the Company’s 2020 and longer-term sustained results.2021 financial performance, (ii) the financial metrics being established prior to the pandemic, (iii) the cumulative nature of the financial metrics for each PCS plan cycle, and (iv) the degree of stretch performance that is built into the PCS performance metrics, the Company estimates with a high degree of confidence that payout for the PCS cycle ending in 2022 will also be zero. |
| ● | | For 2022 grants, the Company will resume measuring financial performance over a three-year period. Performance will be based on (i) three-year average adjusted return on equity and (ii) three-year book value per share, excluding accumulated other comprehensive income, growth rate. Results may be modified up or down by a maximum of 10% based on three-year relative total shareholder return. Targets will be adjusted for impacts of Long Duration Targeted Improvements (LDTI) under new GAAP accounting rules effective January 1, 2023. Adjustment language will be included in 2022 grant agreements. |
| 4. | Stock Appreciation Rights ("SARs")Based
Awards | Equity | ● | SARs are designedIntended to motivate performance, promote appropriate risk-taking, align theour named executive officers' long-term interests of executives with our shareholders' by focusing the executives on long-term objectives over a multi-year period, including stock price growth. |
●
|
SARs are granted to executives at an award value divided by Black-Scholes’ value of the Company’s stock price.
interests and promote retention. |
| ● | SARs are granted annually and are based on the recipient's position. | ● | The strike price for the SAR is determined by the Company's closing stock price on the award date. |
● | SARs vest over a periodStock appreciation rights have represented 25% of fourlong-term incentive compensation grants in prior years and upon vesting they are settled in the equivalent value of unrestricted shares of common stock. | ● | The annual SARs awardsthat amount will remain unchanged. Stock appreciation rights vest 25% per year, beginning on December 31 of each year. |
| ● | As disclosed in the proxy statement for the previous annual meeting of shareholders, beginning in 2021, 25% of long-term incentive compensation for named executive officers and other senior executive plan participants will be in the form of RSUs, with such awards cliff-vesting after a three year period. |
| ● | As disclosed in the proxy statement for the previous annual meeting of shareholders, due to the impact of COVID-19 on the Company's financial performance, the Committee granted untilthe named executive officers and other plan participants a one-time grant of RSUs in 2021. The RSU awards will fully vestedvest (i.e., “cliff vest”) for individuals employed with the Company on December 31, 2022 and remain exercisablepay out in shares of the Company’s common stock. |
| ● | Restricted share units represented approximately 21.1%* of named executive officer target total compensation for up to 10 years from the award date.2021. |
| ● | Stock appreciation rights represented approximately 8.0%* of named executive officer target total compensation for 2021. |
| 5. | Retirement and Pension Benefits | Deferred Cash | ● |
Intended to provide a competitive level of post-employment income as part of a total rewards package that supports our ability to attract and retain key members of our management. |
| ● | U.S. and Canadian retirement and pension benefits differ, but generally, there are two types of plans: qualified plans and non-qualified plans. |
● | Provided as another competitive component of the total compensation package that permits us to attract and retain key members of our management. | ●
| Qualified plans are paidprovided to eligible associatesemployees up to specified maximum amounts as determined by federal tax authorities. |
| | ●
| Non-qualified plans are provided to eligible associatesemployees who earn compensation above the maximum amounts established by federal tax authorities. |
| ● | Hong Kong retirement and pension benefits are split between: (i) a mandatory provident fund where employees and employer contribute up to a maximum amount; and (ii) a supplementary fund for compensation in excess of the maximum amount applicable to the mandatory provident fund benefit. |
| *Calculation includes the one-time awards granted in 2021 and excludes pension and retirement benefits. Average percentages are rounded. |
Compensation Element #1 - Base Salary
The Compensation Committee begins its annual review of base salary for the executivesnamed executive officers and senior management through discussion with the CEO on the previous year's expectations and achievements for each executive and their pay history. Thehistories. In addition, the Committee additionally references the base salary pay levels as compared to similar pay level roles inat our Pay Level Peer Group.peer companies. The annual base salary
determinations for executives are effective each year on or about March 1, following the executive's annual performance review, which
includes a discussion about individual results against defined expectations. Adjustments to base salary are made periodically to recognize competitive changes, personal performance or change in position or responsibilities.
Compensation Element #2 - Annual Bonus Plan
EmployeesApproximately 93% of the Company are eligible to participateour employees participated in our 2021 Annual Bonus Plan ("ABP"), which provides annual cash incentive compensation based on one or more of the following factors: ourthe Company's overall performance, the performance of the participant’sparticipant's division, business unit or department and individual performance during the previous year. Under the ABP, participants may receive a cash bonus each year. Actual payouts are capped at 200% of target.
The ABP award is designed to serve as an annuala short-term incentive. The target-level financial performance goals established by the Compensation Committee are intended to require substantial efforts by our management team toward our strategic goals, while at the same time they are intended to be within reach if such efforts are made and provide additional rewards for extraordinary achievement. The Compensation Committee establishes ABP objectives for the Company during Februarybefore the end of the first quarter each year and determines results and awards in March of the following March.year. In 2021, ABP financial objectives are not tied to any peer group, but are instead tied solely to our financial performance objectives. ABP Company-wide objectives arewere measured using the following components:
2021 COMPANY ANNUAL BONUS PLAN METRICS2015 COMPANY-WIDE ANNUAL BONUS PLAN METRICS |
| | | | | | | |
| Component | Weight | Definition |
Adjusted Operating Income Per Share1 | 50% | OperatingAdjusted operating income per share is our net income per share from continuing operations less realized capital gains and losses and certain other non-operating items. |
Book Value Per Share Excluding AOCI1
Strategic Scorecard | 25% | Book value per shareThe Strategic Scorecard is an annual discretionary assessment of accomplishments and progress on strategic non-financial goals and is comprised of the company's total equity (excluding AOCI) divided by total common stock outstanding.following five categories, each weighted at 5%: Strategy, Expense and Workforce Management; Cybersecurity, Environmental, Social and Governance (ESG) and Diversity, Equity, and Inclusion (DEI). |
| New Business Embedded Value | 15% | New business embedded value ("NBEV") is a measure of the value of the profits expected to emerge from new business net of the cost of supporting capital. NBEV is a forward-looking calculation that reflects the lifetime value created through new business sales. |
Annual Adjusted Consolidated RevenuesRevenue | 10% | Annual adjusted consolidated revenuesrevenue is total revenues earned by the Company less any excluded transactions undertaken for capital management or risk management purposes during the annual performance period. |
1See "Use of Non-GAAP Financial Measures" on page 6184 for reconciliations from GAAP figures to GAAPadjusted operating figures. |
TargetsThe targets established by the Committee reflect our annual goals for these metrics. The allocation of ABP awards between individual, business unit and Company-wideoverall Company performance varies for each participant and is based on his or her job responsibilities. In general, allocations for business unit, departmental and individual performance are weighted more heavily for employees with less Company-wideoverall Company responsibility. In contrast, allocations for Company-widethe Company's overall performance are weighted more heavily for senior executives because their roles involve greater Company-wide responsibility. Awards are based on a specific target percentage of salary, which varies for each participant.
Business unit results are based on each business unit's financial performance metrics. Individual performance results are measured by progress on major projects, productivity, client development or similar goals in which the associate played a major role. While we intend to tie individual performance to clearly articulated and objective measures, it is necessary (andand at times prudent)prudent for management to use a certain degree of discretion in evaluating individual results. Based on these criteria, the Compensation Committee approves a list of senior management participants, which includes (as applicable) individual incentive and/or business unit or division allocations, a minimum performance level that must be met before any payment can be made, as well as a target and a maximum. In addition, overall Company financial performance must meet certain minimum levels, as determined in advance by the Committee, before any awards (including any portion of an award based solely on individual performance) are made under the ABP. Awards are based on a specific target percentage of salary, which varies for each participant.
We consider business unit and individual performance when evaluating total compensation and may (fromfrom time to time)time establish a specific ABP allocation for a particular business objective or project. The types of individual performance that may be taken into consideration include contributions toward revenue growth, earnings per share, return on equity capital, expense management, operational activities, risk management or product or client development, as well as (in certain cases) intangible items such as progress toward achievement of strategic goals, leadership capabilities, development of staff or progress on major projects in which the individual holds a key role.
In March 2021, the Committee replaced the book value per share excluding AOCI metric in the 2021 ABP with a strategic scorecard. As described above, the scorecard is an assessment of performance in select key focus areas, including, but not limited to: strategy; expense and headcount management; cybersecurity; diversity, equity and inclusion; and environmental, social and governance.
The Committee also removed the “trigger” for payout of awards under the 2021 ABP, which required overall Company financial performance to meet a certain minimum level before any awards are made under the ABP. The Committee believes the thresholds for each metric are sufficiently challenging so as to not require an overall trigger. In addition, the ABP states that the Committee has the discretion to amend compensation payable under the ABP and the Committee may exercise such discretion to reduce ABP compensation if it believes Company financial results do not appropriately represent Company performance and efforts or if payment would be misaligned with shareholder interests. We believe this creates better market alignment with the ABP design.
Compensation Element #3 - Performance Contingent SharesAwards
Our Performance Contingent Share ("PCS") grantsAwards are part of a performance-driven incentive program under our Amended & Restated Flexible Stock Plan.Plan ("Flexible Stock Plan"). The Flexible Stock Plan provides for the grant of performance contingent shares ("PCS"), performance share units ("PSUs"), stock options, stock appreciation rights ("SARs"), net-settled stock options, restricted stock, restricted stock units ("RSUs") and other stock-based awards, as well as cash awards, to our employees. Executives in leadership or senior management roles, or thatwho are considered top subject matter experts within our Company, participate in this program. We believe this
Our PCS program focuses participants onrepresents a significant portion of target compensation for our strategicnamed executive officers and intermediate-term financial and operating goals. Incentive awards are intended to reflect each participant's involvement in our performance and to encourage their continued contribution to our future. We view intermediate incentive awards as an important means of aligning the economic interests of management and shareholders.
for other senior executives. The PCS grants are designed to allow us to reward the achievement of specific intermediate-term corporate financial performance goals with equity that is earned on the basis of Company performance.
We implemented the PCSour performance contingent award program because we believe it is consistent with our pay-for-performance compensation philosophy and achieving the financial performance necessary to increase shareholder value. We believe that the PCS grants require management to focus on intermediate-term growth and return on equity, while the SARs and RSUs are designed to focus attention on accomplishment of long-termlonger-term goals that influenceand the creation of long-term shareholder value. We
The Committee annually evaluateevaluates the appropriate mix of pay elements in comparison to the market to remain competitive in our compensation practices and to best support our strategy. We also annually review the performance metrics to ensure they accurately align compensation with our intermediate-term goals and make changes or adjustments to such metrics when appropriate.
Beginning with the awards granted in 2018, the Committee approved three new metrics for the PCS program to better align executives' efforts and decisions with business results over the intermediate-term. The PCS performance awards granted in 2018, 2019 and 2020 are based on the following absolute metrics: (i) three-year adjusted operating return on equity; (ii) three-year adjusted operating income; and (iii) three-year book value per share, excluding AOCI. The following table describes these performance measures:
2019-2021 AND 2020-2022 PCS PERFORMANCE METRICS
| | | | | | | | |
| Component | Weight | Definition |
Three-Year Adjusted Operating Return on Equity1 | 33.5% | This metric is calculated as cumulative Adjusted Operating Income (defined below) for the three-year period divided by average adjusted stockholders’ equity. Adjusted stockholders’ equity represents total stockholders’ equity excluding AOCI. The average of adjusted stockholders’ equity uses monthly data points during the 3-year measurement period. ROE, AOI and stockholders’ equity excluding AOCI are non-GAAP financial measures. |
Three-Year Adjusted Operating Income1 | 33.5% | This metric is calculated as net income excluding substantially all of the after-tax effect of net investment related gains and losses, changes in the fair value of certain embedded derivatives and related deferred acquisition costs, any net gain or loss from discontinued operations, the cumulative effect of any accounting changes occurring after the targets have been established, and other items that management and the Committee believes are not indicative of the Company’s ongoing operations. |
Three-Year Book Value per Share, Excluding AOCI1 | 33.0% | This metric is defined as adjusted stockholders’ equity divided by the end of period outstanding shares of the Company's common stock. Adjusted stockholders’ equity represents total stockholders’ equity excluding accumulated other comprehensive income (“AOCI”). Book value per share and adjusted stockholders’ equity excluding AOCI are non-GAAP financial measures. |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
The PCS units are granted at the beginning of the performance period. The Compensation Committee also sets award levels with a minimum level of Company performance that must be met before any payment to the individual can be made, as well as a target and a maximum. We use linear interpolation to determine the percentage of the target when performance falls between the minimum, target or maximum performance levels. If we do not meet minimum performance goals, payouts under the awards will not be made. If we exceed those performance goals, payouts under the award can be as much as 200% of the targeted award opportunity. The awards are also contingent uponAs the participant’s employment status with us atCommittee considers the end of the three-year performance period.
PCS grants are not treated as outstanding shares until the performance goals over the three-year performance period are met and awards are made as determined and approved by the Compensation Committee. Awards are made in units of fully-vested, unrestricted common stock. As we consider the targetsfinancial objectives for a particular performance period, wetargets are set the targets at amounts or ranges that are generally consistent with our publicly disclosed growth rate goals.
We measure The Committee believes that achievement of the targets will require a high level of financial and operating performance and the goals and ranges established for theall PCS grants usingare challenging but achievable.
PCS grants are not treated as outstanding shares until the following components:
2015 PCS COMPANY-WIDE PERFORMANCE METRICS |
| | |
Component | Weight | Definition |
Cumulative Revenue Growth Rate | 33.0% | Cumulative revenue growth rate is the compounded average growth rate of the Company's consolidated revenue over the three-year performance period using the Company's annual consolidated revenue for the fiscal year immediately preceding the date of grant as the base year. |
Three-Year Operating Return on Equity ("ROE") | 33.5% | ROE is calculated as operating income divided by average shareholders’ equity excluding Accumulated Other Comprehensive Income ("AOCI") for the three-year performance period. Operating income and equity excluding AOCI are non-GAAP financial measures.1
|
Three-Year Relative Return on Equity ("Relative ROE") | 33.5% | Relative ROE is the percentile ranking of the Company's ROE relative to the ROE of competitor companies in the Performance Peer Group over the same three-year performance period. |
1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
As discussed below under "Executive Compensation Process - Competitive Marketplace Assessment," the Committee determines a target total compensation package for our named executive officers based on an analysis of competitive market conditions and overall Company performance. Accordingly, the Committee does not consider individual performance to a material extent in determining the size of PCS and SARs awards. However, allAll participants are required to maintain an acceptable level of performance to be eligible to receive equity incentive awards. For the 2021-2023 PCS program, the Committee established specific financial performance metrics for each of 2021 and 2022, with 2023 serving as an additional time vesting period. PCS grants prior to 2021 measured financial performance over a three-year period, but due to the global pandemic and uncertain business environment the Committee altered the measurement period for the 2021 grants only. The grants are made pursuantin March 2022 for the 2022-2024 PCS program returned to measuring financial performance over a three-year period.
Prior to 2021, PCS grants represented 75% of long-term incentive compensation grants for named executive officers, which is a higher allocation of performance shares than the termsaverage of our Flexible Stock Planpeer companies. To rebalance the award allocation and award agreements. Upon retirement,better align with peers, the 2021 PCS grantgrants represent 50% of such long-term incentive compensation grants, with the remaining 50% of grants allocated 25% to RSUs and 25% to SARs.
2021-2023 PCS PERFORMANCE METRICS (MEASURED IN EACH OF 2021 AND 2022 ONLY) | | | | | | | | |
| Component | Weight | Definition |
Adjusted Operating Return on Equity1 | 33.5% | This metric is is calculated as adjusted operating income for the applicable year divided by average adjusted stockholders’ equity. Adjusted stockholders’ equity represents total stockholders’ equity excluding accumulated other comprehensive income. The average of adjusted stockholders’ equity will use monthly data points during the one-year evaluation period. |
Adjusted Operating Income1 | 33.5% | This metric is calculated for the applicable year as net income excluding substantially all of the after-tax effect of net investment related gains and losses, changes in the fair value of certain embedded derivatives and related deferred acquisition costs, any net gain or loss from discontinued operations, the cumulative effect of any accounting changes occurring after the targets have been established, and other items that management and the Committee believes are not indicative of the Company’s ongoing operations. |
Book Value per Share, Excluding AOCI1 | 33.0% | This metric is defined as adjusted stockholders’ equity for the applicable year divided by the end of period outstanding shares of the Company's common stock. Adjusted stockholders’ equity represents total stockholders’ equity excluding accumulated other comprehensive income (“AOCI”). Book value per share and adjusted stockholders’ equity excluding AOCI are non-GAAP financial measures. |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
In March 2022, the Committee eliminated the Adjusted Operating Income metric to remove overlap with the same metric in the Annual Bonus Plan. Going forward, the Company will be pro-rated baseduse the two remaining metrics to measure PCS performance — three-year book value per share, excluding AOCI (50%) and average operating return on equity (50%). Additionally, the numberCommittee has added a Relative Total Shareholder Return modifier, recognizing both the prevalence of monthsrelative total shareholder return metrics among the Company’s peers and the importance of measuring the Company's performance against its peers. The Committee believes the addition of this modifier better aligns the Company's long-term incentive compensation program with market practices. As such the metrics for PCS grants for the 2022-2024 performance period are:
2022-2024 PCS PERFORMANCE METRICS
| | | | | | | | |
| Component | Weight | Definition |
Book Value per Share, excluding AOCI, Growth ("BVPS Growth")1 | 50.0% | BVPS Growth for each Performance Cycle is defined as the average of the annual growth rates in book value per share, excluding AOCI, for each year in the performance cycle. |
Average Operating Return on Equity ("Average ROE")1 | 50.0% | Average ROE for each Performance Cycle is defined as the average "Adjusted operating return, excluding standard adjustments, on equity (ex AOCI) - trailing 12 months" for each of the three years of the Performance Cycle. Standard adjustments identified are actuarial assumption reviews (e.g. mortality, morbidity, and lapse assumption changes and their impact on reserves and the carrying value of deferred acquisition costs), variable investment income outside of a range of -50% to +50% of income on these investments included in the three-year plan, and integration costs or other adjustments related to merger and acquisition activity. Standard adjustments represent a positive or negative impact to adjusted operating income. |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
The Company's Relative Total Shareholder Return ranked against an established group of companies will modify the results of the grant holder’s participation during the three-year performance period and the numberabove metrics up or down by a maximum of shares earned, provided that the holder has attained age 55 and a combination of age and years of service with the Company that equals at least 65.10%.
Compensation Element #4 - Stock Appreciation RightsBased Awards
Stock Appreciation Rights ("SARs") are granted annually under our Flexible Stock Plan andto executives in leadership or senior management roles, or to employees considered top subject matter experts within the Company. The number of SARs granted annually is based on the grant recipient’s position and level of responsibility within the Company. As discussed below under "Executive Compensation Process - Competitive Marketplace Assessment," theThe Committee considers compensation data of the Pay Level Peer Groupour peer companies and published surveys in determining the amounttotal target compensation, inclusive of SARs granted to our named executive officers and considers market data from published surveys in determining the amountother participants. We believe this program focuses participants on our strategic and financial goals while aligning our executives’ interests with those of SARs granted to other participants.our shareholders and promoting retention. For more information on our peer companies, see "Executive Compensation Process - Competitive Marketplace Assessment."
The vesting schedule for SARs grants is four years, 25% of which vests on December 31 of each of the first four years. The grant value of a SAR is equal to the NYSE closing price of the Company’sCompany's common stock on the grant date of the award (i.e., the date of the March 2015 Compensation Committee meeting)meeting at which the Committee approves the grants), multiplied by a Black-Scholes Model factor (which calculates the current economic value of a SAR using assumptions that include exercise price, the term of the award, a risk-free rate of interest, dividend yield and observed market volatility). Upon vesting, the SARs are settled in the equivalent value of unrestricted shares of common stock. The SARs expire 10 years after the grant date.
The Company grants non-qualified net-settled stock options ("NSOs") for Canadian executives in lieu of SARs to alleviate certain negative tax consequences for these executives. These NSOs are similar to SARs from the recipient's perspective, in that when exercised the executive receives a number of shares with a value equal to the spread between the strike price and the stock price at exercise (less withholdings). Upon retirement, provided thatnet settlement, the participant has attained age 55NSOs are taxed as stock options under Canadian law, while SARs are taxed as ordinary income. NSOs and a combination of age and years of service withSARs have the same impact on the Company that equals at least 65,and thus, the issuance of these NSOs results in tax efficiencies for the executive with no increased costs for the Company or impact to share usage under the Flexible Stock Plan. For convenience, when we discuss SARs continuethroughout this Proxy Statement, such discussion includes NSOs for our Canadian executives.
As described above in "Compensation Element #3 - Performance Contingent Awards," in March 2021, the Committee reduced the allocation to PCS and added an annual grant of restricted stock units ("RSUs") to executives in leadership or senior management roles, or to employees considered top subject matter experts within our Company under our Flexible Stock Plan. The number of RSUs granted annually will be based on the grant recipient's position and level of responsibility within the Company. The Committee considers compensation data of our peer companies and published surveys in determining the total target compensation, inclusive of RSUs, granted to our named executive officers and other participants. We believe this program aligns our executives' interests with those of our shareholders and promotes retention.
RSUs will vest in accordance withon December 31st of the third year from grant. Upon vesting, schedule.the RSUs will be settled using shares of common stock.
Compensation Element #5 - Retirement and Pension Benefits
We recognize the importance of providing comprehensive and cost-effective employee benefits to attract, retain and motivate employees. We offer our executives market competitive retirement programs as described below, including adefined contribution savings plans, traditional defined benefit and hybrid defined benefit pension plan, augmented plan, savings planplans and aan executive deferred savings plan. The Company reviews its retirement and pension benefits programs from time to time and makes adjustments to the design of the programs as necessary to meet these objectives and to remain competitive. Because our named executive officers are eitherresidents of the United States, or Canadian residents,Canada and Hong Kong, we have described the benefits in boththose jurisdictions below.
Qualified and Registered Plans - U.S.
Savings Plan. U.S. basedU.S.-based employees of the Company may participate in a qualified 401(k) plan and make pre-tax or after-tax (Roth)and Roth elective deferrals to the plan ("Savings Plan"). Employees may contribute up to the maximum allowed by the U.SU.S. Internal Revenue Code. The Company provides matching contributions on elective deferrals up to 5% annually. The Company also provides a 2% fixed employer contribution to employees who work at least 1,000 hours and are employed on December 31. In compliance with the U.S. Internal Revenue Code for 2015,2021, contributions to the Savings Plan could notcannot be made on cash compensation in excess of $265,000$290,000 and employee contributions were limited to $18,000.a maximum of $26,000 ($19,500 plus an additional $6,500 for those 50 years of age and older).
Employees hired on or after January 1, 2020 who participate in the Savings Plan will be eligible for a 5% Company-provided fixed employer contribution (instead of Contentsthe 2% fixed employer contribution) if they work at least 1,000 hours and are employed on December 31.
As of December 31, 2021, Ms. Manning, Mr. Larson, Ms. Barbi and Mr. Herrmann participated in the U.S. Savings Plan.
Pension Plan. U.S. based employees, including ourcertain named executive officers, participate in the RGA Performance Pension Plan ("Pension Plan"), a qualified defined benefit plan. The Pension Plan is a broad-basedwidely available retirement plan, thatfor all full-time employees hired before January 1, 2020, and is intended to provide a source of income for employees during retirement. The Pension Plan provides a "Traditional Benefit," that is paid exclusively in the form of an annuity, and a "Performance Pension Account Benefit," that is generally paiddefined as a lump-sum, butlump sum account balance payable on or after termination of employment. The account balance may be paid asconverted to an actuarial equivalent annuity if the participant has met the retirement plan eligibility of a minimum of ten-years’ service and a minimum age of 55. The Traditional Benefit is provided to participants who were employed prior tobenefit.
Employees hired before January 1, 1996, with2020 are eligible to participate in the sum ofpension plan and accrue benefits under the Performance Pension Account Benefit (subject to the age and years of service equaling at least 45. Participants employedrequirements required by the plan to begin participation). Employees hired on or after January 1, 19962020 are not eligible forto participate in the "Performance Pension Account Benefit" only.Plan. Employees rehired with the Company on or after that date will not be eligible to accrue further benefits in the Pension Plan.
As of December 31, 2021, Ms. Manning and Messrs. WoodringLarson and Lay meet the eligibility to obtain the "Traditional Benefit" for service years prior to January 1, 1996 and the "Performance Pension Account Benefit" for service years thereafter. Ms. Kinnaird isCheng were eligible to receive the Performance Pension Account Benefit only. The benefit payable for life at age 65 for Messrs. Woodring and Lay isBenefit. Mr. Cheng does not accrue additional benefits under the sumplan since his transfer of (a) and (b) below; the benefit payable for Ms. Kinnaird at age 65 is as described in (b) below:
(a) Traditional Benefit: The sum of (1) and (2) as follows:
(1) 1.05%employment outside of the participant’s Final Average Monthly Compensation (as defined below) multiplied by the number of years of Accrual Service (as defined below) as of the date of determination, subject toU.S., but he is vested in a maximum of 35 years, plus
(2) 0.65% of the excess, if any, of the Participant’s Final Average Monthly Compensation minus one-twelfth of the Participant’s Social Security Maximum Wage Average (as defined below), multiplied by the number of years of Accrual Service as of the date of determination, subject to a maximum of 35 years.
(b) Performance Pension Account Benefit: The sum of (1) and (2) as follows:
(1) Participants earn base credits for each year of accrualBenefit from his prior service completed under the plan. The credit is a percentage of base salary and the target ABP award based on the participant’s age on January 1 of the Pension Plan year, as shown in the table below:
PERFORMANCE PENSION ACCOUNT BENEFITS |
| |
Age on January 1 of the
Plan Year in which
the Year of Service is Earned
| Percentage of Final
Average Annual
Compensation Credited
|
Up to 35 | 2% |
35 – 44 | 4% |
45 – 54 | 6% |
55 or over | 8% |
(2) Additional base credits are earned on Final Average Annual Compensation (as defined below) that is greater than 60% of the prevailing Social Security Wage Base (as defined below), rounded to the next $100. Additional credits are always half of the base credits, as illustrated in the table below:
ADDITIONAL PERFORMANCE PENSION ACCOUNT BENEFITS |
| |
Age on January 1 of the
Plan Year in which
the Year of Service is Earned
| Additional Credits |
Up to 35 | 1% |
35 – 44 | 2% |
45 – 54 | 3% |
55 or over | 4% |
Payment of the specified retirement benefits is contingent upon continuation of the plans in their present form until the officer retires.
"Final Average Annual Compensation" means the average of compensation received during 5 consecutive years of accrual service within the last 10 calendar year period immediately preceding termination of employment which produces the highest average (or during all the years of accrual service if less than 5). "Year of Accrual Service" means a year is credited for each plan year after employee becomes a plan participant, in which the participant is credited with at least 1,000 hours of service. "Social Security Wage Base" means the 35-year average of the maximum amount of compensation on which the Social Security benefits are based according to year of birth and assuming the participant has always received wages at least equal to those subject to tax under FICA (Federal Insurance Contributions Act). "Social Security Maximum Wage Average" means the average of the Social Security Wage Base in effect for each calendar year during the 35-year period ending with the calendar year in which a participant attains the Social Security retirement age.
Qualified and Registered Plans - Canada
Registered Pension Plan. All permanent Canadian associates are required to join the defined contribution plan on their date of hire.
Each associate is required to contribute, by payroll deduction, an amount equal to 5% of their annual earnings (base salary and cash bonus earned). The Company contributes, on behalf of each associate, an amount equal to the required contribution of the associate (5%), up to 50% of the maximum allowable limit per calendar year as set under the Canadian Income Tax Act. For 2015, the maximum allowable limit for combined employer and associate contributions is CAD$25,370. Employer contributions are immediately vested.
Company and associate contributions are locked-in benefits (cannot be accessed by the associate) until an associate retires at age 55 or later. Voluntary contributions made by the associate over and above the required contribution level are permitted under the plan and the associate may withdraw such funds at any time.
A deferred or immediate life annuity contract may be purchased whereby the associate can transfer the value of the benefit to another registered pension plan, a registered retirement savings plan (if conditions are met as stipulated by applicable legislation) or any form of registered retirement income fund.U.S.
Non-qualified and Supplemental Plans - U.S.
Non-qualified Augmented Plan. The Company's Augmented Benefit Plan ("Augmented Plan") is designed to restore benefits lostunavailable in the qualified Savings Plan and Pension PlansPlan due to IRS compensation limitations for qualified plans, which was $265,000$290,000 for 2015. In order for an associate's retirement income provided under the plans to be based on total eligible cash compensation, the2021. The Augmented Plan provides U.S. based executives at the vice president level and above benefits based on an associate'semployee's annual cash compensation,
in accordance with the Internal Revenue Code. Additionally, theThe Augmented Plan provides executives the opportunity to receive employer matching, and employer non-elective contribution credits, and additional pension plan credits without regard to qualified Planplan limitations imposed by the IRS;IRS.
The Augmented Plan has two components: a 401(k) Savings component and alla Pension component. All contributions to the planAugmented Plan are made by the Company. The matching contribution credits in the 401(k) Savings component of the Augmented Plan are only made if an employee's compensation for the year has not otherwise been matched with a credit in the Executive Deferred Savings Plan.
The investment fund alternatives in the savings portion of the Augmented Plan are identical to the options in the qualified Savings Plan, withexcept the exception of theAugmented Plan includes a fixed rate option, thatwhich offers a fixed interest rate set at the beginning of the plan year. We creditThe Company credits the associate'semployee's non-qualified deferred compensation account with the returns he or she would have received in accordance with the investment alternatives selected from time to time by the associate. We doemployee. The Company does not pay above-market or preferential earnings, compensation or returns under the Augmented Plan or any other plan. Distributions from the Augmented Plan cannot be made until the participant terminates his or her employment.is no longer employed by the Company.
As of December 31, 2021, Ms. Manning and Mr. Larson participated in both components of the Augmented Plan and Ms. Barbi and Mr. Herrmann participated in the savings component of the Augmented Plan. For additional details regarding executive participation in our retirement plans, see "Compensation Tables and Other Matters - Pension Benefits in 2021."
Non-qualified Executive Deferred Savings Plan. U.S. associatesemployees at the vice president level and above are eligible to participate in our Executive Deferred Savings Plan ("EDSP"), a non-qualified savings plan which allows associatesemployees to defer income, including annual bonuses,ABP payments, without regard to qualified plan limitations. Eligible associatesFor the 2021 plan year, eligible employees are able to defer up to 50% of their base salary and up to 100%75% of their Annual Bonus PlanABP payments.
The Company credits EDSP accounts with matching contributions equal to the matching contributions unavailable to the associate could not receiveemployee under the SavingSavings Plan (100% of total deferrals up to 5% of compensation in 2016)2021) due to IRS compensation limits in the Savings Plan. The named executive officersEmployees cannot withdraw any amounts from EDSP balances until they either terminate employmentare no longer employed by the Company or reach the designated distribution date selected by the executiveemployee at the time of their deferral election. With respect to these distributions, participants may elect to receive either a lump-sum payment or 12 to 15 annual installments.
The investment fund alternatives under the EDSP are identical to those in the Savings Plan, withexcept the exception of theEDSP includes a fixed rate option, thatwhich offers a fixed interest rate set at the beginning of the plan year. We creditThe Company credits the participant’sparticipant's non-qualified deferred compensation account(s) with the returns he or she would have received in accordance with the investment alternatives selected from time to time by the associate. We doemployee. The Company does not pay above-market or preferential earnings, compensation or returns under EDSP or any other plan.
Of the non-qualified plans,As of December 31, 2021, Ms. Manning, Mr. Woodring participates exclusively in the Augmented PlanLarson, Ms. Barbi and Mr. Lay and Ms. KinnairdHerrmann were eligible to participate in the AugmentedEDSP.
Supplemental Payment Agreement. As previously disclosed in a Current Report on Form 8-K filed on July 25, 2019, the Company agreed to provide a supplemental payment (the "Supplemental Payment") to Ms. Manning upon her retirement from the Company, as an acknowledgment of the financial implications on her retirement benefits with respect to her relocation to the U.S. from Canada in 2016. The Supplemental Payment is designed to supplement the post-retirement benefits she will receive under the Company's U.S. and Canadian retirement and savings plans to provide her with an aggregate financial value comparable to that which she would have received under the Company's U.S. retirement and savings plans had she worked in the U.S. for her entire career.
The Supplemental Payment will represent the difference between (i) the value of the Company-provided benefits that she would have received upon her retirement had she worked her entire career (starting upon her hire date in 2007 through retirement) in the U.S., and (ii) the value of Company-provided benefits that she will actually receive upon retirement from the Company. For this purpose, Company-provided benefits include any savings, pension or deferred compensation benefits funded by the Company based on her deferrals of pay, additional non-elective contributions to company retirement accounts and any subsequent investment returns credited to those deferred compensation accounts based on contribution from the Company. The value of any salary deferrals by Ms. Manning, including any subsequent investment return credited to those retirement accounts for those salary deferrals, is not included in the calculation of the Supplemental Payment.
The Supplemental Payment will be made in U.S. dollars and is payable after Ms. Manning’s retirement from the Company as a single lump sum payment.
Qualified and Registered Plans - Canada
Registered Pension Plan. All permanent Canadian employees are required to join the defined contribution plan on their date of hire. Each employee is required to contribute, by payroll deduction, an amount equal to 6% of their annual earnings (base salary and ABP payments), up to 50% of the maximum allowable limit per calendar year as set under the Canadian Income Tax Act. The Company contributes, on behalf of each employee, an amount equal to the required contribution of the employee, up to 50% of the maximum allowable limit per calendar year as set under the Canadian
Income Tax Act. For 2021, the maximum allowable limit for combined employer and employee contributions is CAD $29,210. Employer contributions are immediately vested.
Effective January 1, 2021, the required employee contribution and matching Company contribution was increased to 6% of annual earnings, subject to the same limitations under the Canadian Income Tax Act described above.
Company and employee contributions cannot be accessed by the employee until an employee retires at age 55 or later. Voluntary contributions made by the employee above the required contribution level are permitted under the plan and the Executive Deferred Savings Plans. For additional details regarding executive participationemployee may withdraw such funds at any time. Upon termination or retirement and subject to applicable legislation and tax withholding, plan participants may purchase a deferred or immediate life annuity contract or transfer the value of the benefit to another registered pension plan, registered retirement savings plan or any form of registered retirement income fund.
In 2021, Mr. Néemeh participated in our retirement plans, see "Compensation Tablesthe Registered Pension Plan. Ms. Manning previously participated in the Registered Pension Plan before her relocation to the U.S., and Other Matters - Pension Benefits in 2015."she continues to maintain an accumulated balance of past employee and employer contributions.
Non-qualified and Supplemental Plans - Canada
Defined Benefit Supplemental Executive Retirement Plan. RGAThe Company offers a defined benefit Supplemental Executive Retirement Plan ("DB SERP") in Canada to associatesemployees at the vice president level and above who are approved by senior management. An associateemployee must also participate in the Registered Pension Plan in order to participate in the DB SERP. Benefits are payable atThe DB SERP offers a traditional defined benefit annuity to participants based on the time an associate leavesaverage of their highest five consecutive years of compensation that is above certain compensation thresholds set out in the Company.plan. The DB SERP benefit is calculated onusing a number of factors including the associate’semployee's years of credited service and average pensionable earnings, each determined on the date the associateemployee ceases to be an executive in Canada or leaves the Company. Benefits are payable at the time an employee leaves the Company.
Effective January 1, 2020, no new executives may participate in the DB SERP. Executives hired on or after January 1, 2020 or who are promoted to an eligible executive position after January 1, 2020 are eligible for a defined contribution supplemental executive retirement plan offered by the Company. In addition, the DB SERP's accrual formula was changed so that service accruals after December 31, 2019 accrue a smaller benefit on a participant's final average compensation above a certain level.
Effective January 1, 2021, the threshold for compensation eligible for the DB SERP was updated to mirror the threshold for the newly established defined contribution supplemental executive retirement plan (defined below). Accruals in the DB SERP for any service on or after January 1, 2021 is based on any compensation not eligible for the underlying Registered Plan benefit due to Canadian Income Tax Act contribution limitations.
An associateemployee who retires on or after age 60 and has completed at least 5five years of uninterrupted employment with the Company shall beis entitled to receive an annual supplementary allowance.allowance under the DB SERP. The allowance is a non-indexed pension that does not increase with inflation. The annual supplementary allowance payable is converted from the employee's accrued life annuity benefit to the associate is paid overan actuarial equivalent lump sum or annuity with a ten-year term.term of 10 years of less. All benefits under the DB SERP are subject to applicable withholding tax and reporting pursuant to the Canadian Income Tax Act and any other applicable law.
An associateUnder the DB SERP, an employee may elect to retire atafter attaining age 50, provided the associateemployee has completed at least 5five years of uninterrupted employment with the Company, and subject to a reduction of the employee's annuity benefit of 0.33% for each month by which the associateemployee retires before age 60.
In 2021, Mr. Néemeh participated in the DB SERP. Ms. Manning and Mr. Néemeh participateparticipated in the Supplemental Executive Retirement Plan.DB SERP until her relocation to the U.S. in April 2016. Ms. Manning's accrued benefit in the DB SERP will be deferred until her retirement. For additional details regarding executive participation in our retirement plans, see "Compensation"Compensation Tables and Other Matters - Pension Benefits in 2015. 2021." Defined Contribution Supplemental Executive Retirement Plan. The Company offers a defined contribution Supplemental Executive Retirement Plan (“DC SERP”) in Canada to employees at the vice president level and above and approved by senior management. Any employee hired or promoted on or after January 1, 2020 is eligible for participation in the DC SERP (and not eligible to accrue benefits in the DB SERP). An employee must also participate in the Registered Pension Plan to participate in the DC SERP. In 2021, none of the named executive officers participated in the DC SERP plan.
Supplemental Retirement Plan - Hong Kong
The Company offers a supplemental retirement plan to all full-time regular employees in Hong Kong. The plan includes both a mandatory contribution component under the Hong Kong Mandatory Provident Fund ("MPF") system and a voluntary contribution as a supplementary retirement provided by the Company.
Under the plan, both the Company and Hong Kong employees are each required to make regular mandatory contributions calculated at 5% of the employee's relevant income to an MPF plan, subject to the minimum and maximum relevant income levels. The maximum relevant income level is capped at HK$30,000 per month in 2021.
In addition to the mandatory portion, the Company makes contributions at a total of 10.8% of the base remuneration, up to a maximum amount, less any mandatory employer contributions. The maximum amount for calculating the contributions is set at HK$2.5 million per annum. The benefit is subject to a vesting schedule associated with years of continuous service with the Company.
The Hong Kong supplementary retirement plan has a 10-year graded vesting period. Contributions to this supplementary retirement fund are typically not available for use by employees, even after they terminate employment with the Company, until they reach age 65.
As of December 31, 2021, Mr. Cheng participated in the Hong Kong supplementary retirement plan. Mr. Cheng is part of a separate subgroup for which the contributions made to the supplementary retirement fund are not limited to the maximum base salary limitation. The supplementary contribution for Mr. Cheng is based on his full base salary remuneration.
EXECUTIVE COMPENSATION PROCESS
The Role of the Compensation Committee
Our executive compensation program is evaluated and approved by the Compensation Committee with the objective of providing incentive-based compensation that aligns with the business goals of the Company and the interests of itsour shareholders. The Compensation Committee also determines the compensation of the Chief Executive Officer ("CEO") and evaluates and approves the compensation for the executive officersmembers of senior management of the Company, including our named executive officers.
Timing of Compensation Decisions
We typically release earningsThe Committee approves compensation for executive officers in March of each year. All compensation and incentive awards are made in consideration of market pay competitiveness and in comparison to peer company and published survey data.
In March 2021, the fourth quarter in late January ofCommittee approved the following year. In 2015, the Compensation Committee met in early March to approve the regular grants of SARsPCS, PSU, RSU and PCSSAR awards. Equity
grants are effective on and have a grant date of the same day as the Committee meeting, and themeeting. The strike price for grants of SARs is the NYSE closing price of our common stock on the day of the Committee meeting. This timing and process is designed to ensure that our fourth quarter earnings information (typically released in late January) is fully disseminated to the market by the time the SARs strike price is determined. The PCS awards are measured by financial performance over a three-year period and the market price of our common stock is not a factor in those calculations or measures.
The Compensation Committee approves compensation for executive officers at its regularly scheduled meeting in March of each year. All compensation and incentive awards are made in consideration of market pay competitiveness and in comparison to Pay Level Peer Group.
Compensation ConsultantConsultants
In forming its recommendations on our overall compensation program, the Committee has, from time to time, engagedengages an independent consulting firm to provide advice about competitive compensation practices and to determine how our executive compensation compares to that of other comparable companies, including selected publicly held insurance and reinsurance companies. Steven Hall &In 2021, Meridian Compensation Partners, LLC ("SH&P"Meridian") currently servesserved as independent advisor to the Compensation Committee.
The Committee directly engaged SH&PMeridian to advise and assist with decisions relating to our executive compensation program, including providing advice regarding incentive plan design, annual comprehensive competitive market studies, competitive compensation data for directors, technical advice on disclosure requirements relating to executive compensation and to apprise the Compensation Committee of compensation bestmarket practices. Annually, SH&P conducts an evaluation of the Pay Level Peer Group and aMeridian also performs competitive marketplace assessmentmarketplaces assessments of our named executive officers, which includes a comparison to our Pay Level Peer Group. SH&Ppeer companies and published survey data. Meridian will also periodically conducts a reviewconduct reviews of our incentive plans to ensure a competitive position.
Other than work for the Compensation Committee, SH&PMeridian provides no other services to the Company or its affiliates. Additionally, the Company’s Compensation Committee determined no conflicts of interest exist which wouldexisted to prevent SH&PMeridian from serving as an independent advisorsadvisor to the Compensation Committee.
Management Participation and Involvement in Compensation Decisions
Pursuant to the Compensation Committee charter, the Committee reviews and approves the compensation of our Chief Executive Officer,CEO, other named executive officers and senior management. ManagementThe CEO plays a significant role in the compensation-setting process for the named executive officers (other than the CEO),. The CEO and senior management play a significant role in setting compensation for management and all other employees. No member of management is involved in determinations regarding their own pay. The most significant aspects of management’smanagement's role are:
•evaluating employee performance;
•recommending business performance targets, goals and objectives; and
•recommending salary levels, cash bonusABP and equity incentive award targets.
Our Chief Executive OfficerCEO and Chief Human Resources Officer work with the Compensation Committee chair to establish the agenda for Committee meetings. The Company also prepares relevant information and reports for each Compensation Committee meeting. Our Chief Executive Officer also participates in Compensation Committee meetings at the Committee’sCommittee's request to provide:
•background information regarding our strategic objectives;
•an evaluation of the performance of the senior management and direct reports; and
•compensation recommendations as to senior management and direct reports.
Our executives and other members of management are also made available to SH&PMeridian or any other compensation consultant to provide information regarding position descriptions, compensation history and other information as requested, and to review draft results provided by SH&P.Meridian.
Competitive Marketplace Assessment
We use three groupsour established peer group of companies to evaluate our compensation practices for purposes such as pay levels pay design and performance comparisons.
design for our named executive offices as well as director compensation. 2015 PAY LEVEL PEER GROUP |
| | | | |
Purpose: | We use the Pay Level2021 Peer Group to evaluate the overall competitiveness of our compensation packages, as well as individual elements of compensation.Companies |
How Peer Companies are Chosen:Aflac, Incorporated | We use a group comprised of companies based on industry and size that are appropriate comparators for purposes of evaluating the competitiveness of our pay levels. The selected companies are publicly-traded insurers and reinsurers (life and property-casualty) and other financial services companies, including direct competitors.Globe Life, Inc. |
Last Evaluated: | In 2015, SH&P performed a comprehensive assessment of this group to determine the continued appropriateness of each constituent. |
Peer Group Members: | American Financial Group, Inc. | PartnerRe Ltd. |
American National Insurance Co. | Principal Financial Group, Inc. |
Assurant, Inc. | StanCorp Financial Group, Inc. |
CNO Financial Group, Inc. | Sun Life Financial, Inc. |
Everest Re Group Ltd. | The Hartford Financial Services Group, Inc. |
Genworth Financial, Inc.American National Insurance Company | Unum Group |
| Lincoln National Corp. | |
2015 PAY DESIGN PEER GROUP |
| | |
Purpose: | The Pay Design Peer Group is used to evaluate market practices with respect to types of pay vehicles utilized, incentive compensation program designs, performance metrics and pay mix. |
How Peer Companies are Chosen: | We use the companies in the Pay Level Peer Group, as well as eight additional companies that were deemed inappropriate comparators for purposes of evaluating pay levels due to size, but which the Compensation Committee believes are useful sources of competitive intelligence regarding pay design and practices. |
Last Evaluated: | In 2015, SH&P performed a comprehensive assessment of this group to determine the continued appropriateness of each constituent. |
Peer Group Members: | Aflac,Assurant, Inc. | Munich Re |
American Financial Group, Inc. | PartnerRe Ltd. |
American National Insurance Co. | Principal Financial Group, Inc. |
Assurant,Brighthouse Financial, Inc. | PrudentialSun Life Financial, Inc. |
| CNO Financial Group, Inc. | StanCorp Financial Group, Inc. |
Everest Re Group Ltd. | Sun Life Financial, Inc. |
Genworth Financial, Inc. | Swiss Reinsurance Co. Ltd. |
Kemper Corporation | The Hartford Financial Services Group, Inc. |
Lincoln National Corp. | Torchmark Corporation |
Manulife Financial Corp. | Unum Group |
Metlife,Equitable Holdings, Inc. | Voya Financial, Inc. |
2015 PERFORMANCE PEER GROUP |
| | |
Purpose: | The Performance Peer Group is used to evaluate our relative performance for purposes of determining incentive compensation paid. |
How Peer Companies are Chosen: | For comparisons of our performance among companies in the life insurance and reinsurance industry, we exclude most companies in the property and casualty business because their return profile is not a good comparator; however, we retain two large, global multi-line (property-casualty and life) competitors because they are among the companies against whom we measure our performance and returns. |
Last Evaluated: | In 2015, SH&P performed a comprehensive assessment of this group to determine the continued appropriateness of each constituent. |
Peer Group Members: | Aflac, Inc. | Principal Financial Group, Inc. |
American National Insurance Co. | Prudential Financial, Inc. |
Assurant, Inc. | StanCorp Financial Group, Inc. |
CNO Financial Group, Inc. | Sun Life Financial, Inc. |
Genworth Financial, Inc. | Swiss Reinsurance Co. Ltd. |
Lincoln National Corp. | The Hartford Financial Services Group, Inc. |
Manulife Financial Corp. | Torchmark Corporation |
Metlife, Inc. | Unum Group |
Munich Re | |
2015The Committee regularly reviews the companies we use to evaluate our compensation practices for purposes such as pay levels and pay design. In 2021, Meridian performed an analysis of the Company’s Peer Group Changes
In February 2015, the Compensation Committee made modifications to the three peer groups used for evaluation of compensation levels and practices as follows:
Phoenix Companies, Inc. was removed from all peer groups due to lack of timely public filings.
Protective Life Corp. was removed from all three peer groups after it was acquired by Dai-Ichi Life Insurance in 2014.
Torchmark Corporation was removed from the Pay Level peer group due to its size falling below that specific peer group’s parameter for the second consecutive year. Torchmark Corporation remains in the Pay Design and Performance peer groups as size is not a determining factor in the construction of those groups.
The Hartford Financial Services Group, Inc. was added to all three peer groups, as it falls within the size and industry parameters for the Pay Level peer group and is considered a peer company by shareholder advisory firms.
Sun Life Financial, Inc. was added to the Pay Level peer group as it falls within the size and industry parameters and is considered a peer company by shareholder advisory firms. Sun Life was previously part of the Pay Design and Performance peer groups.
recommended no changes. We plan to continue to review and update these liststhis information periodically in order to ensure that our peer company comparators remain appropriate in light of evolving best practices with respect to peer group determinations, mergers and acquisitions, divestitures, growth in our size and the size of those companies in the comparator groups and other changes which might affect the appropriateness of a particular comparator.
How We Use Peer GroupCompany Data
When making determinations in 20152021 relating to base salary, target total cash compensation, intermediate and long-term incentives and target total direct compensation for our named executive officers, we used the competitive compensation analysis provided by SH&PMeridian as the beginning reference point. This analysis included a review and assessment of publicly disclosed proxycompensation data for companies in our Pay Level Peer Grouppeer companies, as well as publicly availableadditional industry-appropriate survey data. WhileIn most markets, we do not explicitly benchmarkalign our paytarget executive compensation levels to particular percentiles, we generally referencewith the market median when evaluating market practice.to retain current talent and attract new talent. In addition to a review of the competitive compensation data provided by SH&P,Meridian, we also considered individual performance, internal pay equity among positions and levels and the relative importance of positions. We believe that the compensation strategy we established aligns our target compensation with the market median and should allow us to retain our current talent and attract new talent.
2015
2021 COMPENSATION ACTIONS AND RESULTS
Compensation Element #1 - Base Salary
In determining the base salaries of our named executive officers, the Compensation Committee considers our compensation compared to that of the Pay Level Peer Group,our peer companies, as well as published surveys. The Compensation Committee also considers recommendations submitted to it by our Chief Executive Officer for the other named executive officers.
In February 2015, based Given the impact the COVID-19 pandemic had on a marketplace assessment, our compensation strategy, our goals forthe Company, management recommended and analysis of targeted overall compensation and Company performance, we increased the 2015 base salary for A. Greig Woodring, our Chief Executive Officer, by approximately 2% to $1,080,000. Based upon quantitative results, the recommendations of our Chief Executive Officer and our subjective evaluation of individual performance, the Committee approvedagreed to no salary increase for all senior level executives in 2021.
Due to an internal restructuring, effective as of September 23, 2021, the following base salaries for 2015 forposition previously held by Mr. Néemeh was eliminated and he is no longer an employee of the named executive officers as listed below. Effective December 1, 2015, in light of Ms. Manning's promotion to President, her salary was increased to $750,000. Additionally, in February 2016, the Compensation Committee established base salaries for the named executive officers set forth below. Because Mr. Larson will be our Chief Financial Officer effective May 1, 2016 and thus will beCompany. As a named executive officer in our 2017 proxy statement, we have included his base salary in the table below and in the relevant disclosures below describing 2016 compensation.result, no forward
looking information on Mr. Néemeh's compensation will be provided. As previously disclosed on the Company's Form 8-K filed with the SEC on December 14, 2021, pursuant to a separation agreement with Mr. Néemeh, the Company agreed to pay the salary and target bonus for Mr. Néemeh for a period of Contentstwo years following his departure from the Company, as required by Québec law, Mr. Néemeh’s jurisdiction of work. During such period Mr. Néemeh will accrue benefits under various Company retirement plans and receive certain other benefits. The separation agreement also provides that Mr. Néemeh will continue vesting in Company equity awards granted prior to his departure.
The Committee has reviewed and approved the relevant salary changes as follows:
2021 AND 2022 NAMED EXECUTIVE OFFICER BASE SALARIES
| | | | | | | | | | | | | | |
| Name | 2021 Base Salary | 2021 Percentage Increase | 2022 Base Salary | 2022 Percentage Increase |
| Anna Manning | $1,030,000 | 0.0% | $1,030,000 | 0.0% |
| Todd C. Larson | $645,000 | 0.0% | $675,000 | 4.7% |
| Leslie Barbi | $575,000 | 0.0% | $600,000 | 4.3% |
Tony Cheng1 | $612,414 | 0.0% | $643,292 | 5.0% |
Ronald Herrmann2 | $600,000 | n/a | $630,000 | 5.0% |
1Mr. Cheng's base salary was converted to USD using an average annual foreign exchange rate. 2Mr. Herrmann joined on November 16, 2020 and was ineligible to receive an increase in 2021. |
| 2015 AND 2016 NAMED EXECUTIVE OFFICER BASE SALARIES |
| | | | |
| Name | 2015 Percentage Increase | 2015 Base Salary | 2016 Percentage Increase | 2016 Base Salary |
| A. Greig Woodring | 2% | $1,080,000 | 0% | $1,080,000 |
| Jack B. Lay | 3% | $621,950 | 3% | $639,950 |
| Anna Manning | N/A | $750,0001 | 0% | $750,000 |
| Alain P. Néemeh | N/A | $550,000 | 3% | $566,500 |
| Donna H. Kinnaird | 3% | $566,500 | 2% | $577,850 |
| Todd C. Larson | N/A | N/A | N/A | $500,0002 |
1 Salary as of December 1, 2015 2 Salary as of May 1, 2016 |
Compensation Element #2 - Annual Bonus Plan ("ABP")
20152021 Annual Bonus Plan Awards. In February 2015,2021, the Compensation Committee approved the performance goals and business criteria for the named executive officers under the ABP for 2015,2021, including the minimum, target and maximum bonusABP opportunities, as a percentage of base salary, as described in the table below. Overall Company financial performance must meet certain minimum levels, as determined in advance by the Compensation Committee, before any awards are made. The target-level performance goals wethe Committee established were meant to require substantial efforts by our management team toward our strategic goals, but at the same time they were intended to be within reach if such efforts are made, and also provide additional rewards for extraordinary achievement. We believe that goals that are too difficult to attain would not have the effect of providing appropriate incentives.
| | | | | | | | | | | | | | | | | | | | |
| Annual Bonus Plan (based only on overall Company performance) |
| Performance Measures and Goals | Minimum | 2021 Target | Maximum | Numerical Results | Weight | Payout Percent |
Adjusted Operating Income Per Share1 | $3.74 | $7.48 | $9.35 | $-1.18 | 50.0% | 0.0% |
| 50.0% | | 125.0% | | | |
| Strategic Scorecard | 1.00 | 3.00 | 5.00 | 3.79 | 25.0% | 34.9% |
| 0.0% | 100.0% | 200.0% | | | |
| New Business Embedded Value | $275.00 | $550.00 | $825.00 | $756.50 | 15.0% | 26.2% |
| 50.0% | | 150.0% | | | |
| Annual Adjusted Consolidated Revenue | $13,414.0 | $14,904.0 | $16,394.0 | $16,657.8 | 10.0% | 20.0% |
| 90.0% | | 110.0% | | | |
Payout2 | | | | | | 81.1% |
1Adjusted operating income per share for ABP purposes excludes approximately $158 million of unrealized gains, net of tax, associated with the Company’s investments in limited partnerships and private equity funds for which it utilizes the equity method of accounting. Unrealized gains on these types of investments were not contemplated when the 2021 ABP performance goals were established and therefore the Committee determined that it is more appropriate to exclude them from actual 2021 performance. See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. 2See "2021 COVID-19 Impact and Paying for Performance" on page 27 for additional information. |
|
| | | | |
| 2015 COMPANY ANNUAL BONUS PLAN RESULTS |
| Metric | Weight | Target | 2015 Result | Performance level |
Operating Income Per Share1 | 50% | $8.60/share | $8.43/share | 85.8% |
Book Value Per Share Excluding AOCI1 | 25% | $84.76/share | $83.23/share | 82.0% |
| New Business Embedded Value | 15% | $400 million | $610 million | 200.0% |
| Annual Consolidated Revenues | 10% | $10.6 billion | $10.4 billion | 85.8% |
| Weighted Average | | | | 101.9% |
1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
In March 2016,February 2022, the Compensation Committee approved the ABP awards for our named executive officers for 20152021 performance. All our named executive officersMs. Manning had ABP allocations based solely100% on overall Company results. Mr. Larson had ABP allocations based on overall Company results theand individual performance. Ms. Barbi had
ABP allocations based on overall Company results and departmental results (Investments), as well as individual performance. Mr. Cheng had ABP allocations based on overall Company results and on business unit results (Asia segment), as well as individual performance. Mr. Herrmann had ABP allocations based on overall Company results and on business unit results (US Markets), as well as individual performance. The weighted average of the Company-specific ABP measuresfinancial performance metrics for 20152021 performance was 101.9%81.1%. As part of an adjustment to ABP results in the EMEA and Asia Pacific business units (in countries other than South Africa and India), a total of $1.7 million was allocated to employees in these business units because of the outsized impact that results in South Africa and India had on segment results. As a result of this adjustment and the successful integration of Mr. Cheng's expanded responsibilities in 2021, Mr. Cheng received an additional payout of $133,055.
The following table describes the minimum, target and maximum bonusABP opportunities for the named executive officers (as a percentage of base salary) as approved by the Compensation Committee in February 2015,March 2021, and the actual ABP payments for 20152021 performance, as approved by the Committee in March 2016:
|
| | | | | |
| 2015 INDIVIDUAL ANNUAL BONUS PLAN RESULTS |
| Name | 2015 Bonus at Threshold | 2015 Bonus at Target | 2015 Bonus at Maximum | Actual Bonus Percentage for 2015 | Actual Bonus Payment for 2015 |
| A. Greig Woodring | 65% | 130% | 260% | 132.6% | $1,431,875 |
| Jack B. Lay | 50% | 100% | 200% | 101.9% | $634,302 |
| Anna Manning | 50% | 100% | 200% | 101.9% | $560,923 |
| Alain P. Néemeh | 50% | 100% | 200% | 101.9% | $560,923 |
| Donna H. Kinnaird | 50% | 100% | 200% | 101.9% | $577,751 |
February 2022:
2016Annual Bonus Plan and Opportunities.The 2016 ABP objectives for Messrs. Woodring, Lay, Néemeh and Larson and Ms. Manning and Kinnaird will be tied solely to overall Company performance, measured 50% on annual Operating Income per share, 25% on book value per share excluding AOCI, 15% on NBEV and 10% on Operating Revenue (see below), with awards based on a specified percentage of salary. In addition, overall Company earnings per share performance must meet certain minimum levels, as determined in advance by the Compensation Committee, before any awards are made.
| | | | | | | | | | | | | | | | | | | | |
| 2021 INDIVIDUAL ANNUAL BONUS PLAN RESULTS |
| Name | ABP Threshold1 | ABP Target1 | ABP Maximum1 | 2021 Target ABP Award in Dollars | Actual ABP Percentage of Target for 2021 | Actual ABP Payment for 2021 |
| Anna Manning | 90% | 180% | 360% | $1,854,000 | 81.1% | $1,504,315 |
| Todd C. Larson | 60% | 120% | 240% | $774,000 | 81.1% | $628,017 |
| Leslie Barbi | 50% | 100% | 200% | $575,000 | 140.6% | $808,278 |
| Tony Cheng | 30% | 60% | 120% | $366,196 | 100.0% | $366,196 |
| Ronald Herrmann | 50% | 100% | 200% | $600,000 | 110.5% | $662,706 |
Alain P. Néemeh2 | 60% | 120% | 240% | $774,000 | 0.0% | $0 |
1Expressed as a percentage of base salary. |
2As described in footnote 7 to the Summary Compensation Table, $774,000 was paid to Mr. Néemeh in lieu of any payment under the ABP. |
Commencing with the 2016 plan year, the Compensation Committee approved replacing the annual consolidated revenues metric with Operating Revenue, a non-GAAP financial measure, as a basis for establishing target levels and awards under the ABP. The Company believes that Operating Revenue better measures the underlying trends of our continuing operations and management actions, primarily because it may exclude certain transactions undertaken for capital management or risk management purposes (such as retroceded blocks of business). In certain circumstances, the Compensation Committee may exclude such transactions from target amounts and/or results of Operating Revenue in determining annual payouts under the ABP.
In March 2016, the CompensationThe Committee approved the performance measures and bonusABP opportunities for the 2016 ABP.2022 (as a percentage of base salary) as follows:
| | | | | | | | | | | |
| 2022 ANNUAL BONUS PLAN OPPORTUNITIES |
| Name | ABP Threshold | ABP Target | ABP Maximum |
| Anna Manning | 100% | 200% | 400% |
| Todd C. Larson | 65% | 130% | 260% |
| Leslie Barbi | 60% | 120% | 240% |
| Tony Cheng | 50% | 100% | 200% |
| Ronald Herrmann | 50% | 100% | 200% |
| | | |
|
| | | |
| 2016 ANNUAL BONUS PLAN OPPORTUNITIES |
| Name | 2016 Bonus at Threshold | 2016 Bonus at Target | 2016 Bonus at Maximum |
| A. Greig Woodring | 65% | 130% | 260% |
| Jack B. Lay | 50% | 100% | 200% |
| Anna Manning | 50% | 100% | 200% |
| Alain P. Néemeh | 50% | 100% | 200% |
| Donna H. Kinnaird | 50% | 100% | 200% |
Todd C. Larson1 | 40% | 80% | 160% |
1 As of May 1, 2016 |
Compensation Element #3 - Performance Contingent Shares ("Awards
The Company’s performance contingent share (“PCS”) program represents a significant portion of target compensation for the Company’s named executive officers and for other executives. As described below, payouts under each PCS") award are determined by Company financial performance over a three-year period. As a result of: (i) the COVID-19 pandemic’s impact on the Company’s 2020 and 2021 financial performance, (ii) the financial metrics being established prior to the pandemic, (iii) the cumulative nature of the financial metrics for each plan cycle, and (iv) the degree of stretch performance that is built into the performance metrics, the payout for the PCS cycle ending in 2021 was zero. The Company estimates with a high degree of confidence that payout for the PCS cycle ending in 2022 will also be zero.
2012-20142019-2021 PCS Results. In February 2012, weMarch 2019, the Committee established the targettargets and rangeranges for cumulative revenue growth rate,the following PCS performance measures: (i) three-year adjusted operating ROEreturn on equity; (ii) three-year adjusted operating income and (iii) three-year Relative ROEbook value per share, excluding AOCI. These measures were set for the period beginning in 20122019 at levels that were consistent with our intermediate-term goals for those measures. The payout results for the 2012-2014 PCS grants were determined in late April 2015 and payments were made in May 2015. The following table describes the PCS payouts for the 2012-2014 performance period:
| 2012-2014 PERFORMANCE CONTINGENT SHARE PAYOUT |
| | | | |
| | Name | Percentage Payout | Number of Shares Acquired on Payout | Value Realized on Payout |
| |
| | A. Greig Woodring | 82.0% | 16,653 | $1,537,405 |
| | Jack B. Lay | 82.0% | 4,997 | $461,323 |
| | Anna Manning | 82.0% | 3,259 | $300,871 |
| | Alain P. Néemeh | 82.0% | 3,259 | $300,871 |
| | Donna H. Kinnaird | 82.0% | 3,457 | $319,150 |
2013-2015PCS Results. In February 2013, we established the target and range for cumulative revenue growth rate, three-year operating ROE and three-year Relative ROE for the period beginning in 2013 at levels that were consistent with our intermediate-term goals for those measures. As a result, at the time of grant, we believed that achievement of the target cumulative revenue growth rate and operating return on equity would require a high level of financial and operating performance. We believed the goals and ranges we established for these grants of PCS were challenging but achievable.
The performance period for the 20132019 PCS grant began on January 1, 20132019 and ended on December 31, 2015. 2021.
In March 2016, weFebruary 2022, the Committee reviewed the results for the 2013-20152019-2021 performance period and determined that our cumulative revenue fornone of the three-year period did not meet threshold performance level. Our ROE exceeded threshold but did not reach the target performance level. Because the relative return on equity measure is dependent upon public availability of financial results from our peer companies, our performance for the relative return on equity metric will not be approved by the Compensation Committee until late April 2016, after the filing of this Proxy Statement. Payments will be made in May 2016. These payments will be fully disclosed in our 2017 Proxy Statement.
Actual results are interpolated to determine the performance level achieved amongmetrics met the threshold target and maximum goals established by the Committee.level. The following table describes the goals established in February 20132019 and actual results available as of April 2016:results:
|
| | | | | | |
| 2013-2015 PCS RESULTS |
| Performance Measure | Weight | Threshold | Target | Maximum | Actual | Percentage of Target Payout |
| Cumulative Revenue Growth Rate | 33.0% | 6% | 8% | 10% | 3.5% | 0.0% |
Three-Year Operating ROE1 | 33.5% | 10% | 11.5% | 13% | 10.2% | 55.3% |
| Three-Year Relative ROE | 33.5% | 25th Percentile | 50th Percentile | 75th Percentile | TBD | TBD |
| Weighted Average | | | | | TBD | TBD |
1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
| | | | | | | | | | | | | | | | | | | | |
| 2019-2021 PCS RESULTS |
| Performance Measure | Weight | Threshold | Target | Maximum | Actual | Percentage of Target Payout |
Three-Year Adjusted Operating Return on Equity1 | 33.5% | 9.5% | 10.5% | 11.5% | 5.7% | 0% |
Three-Year Adjusted Operating Income1 ($M) | 33.5% | $2,451.0 | $2,649.0 | $2,848.0 | $1,268.7 | 0% |
Three-Year Book Value per Share, Excluding AOCI1 | 33.0% | $144.89 | $152.52 | $160.14 | $135.71 | 0% |
| Weighted Average | | | | | | 0% |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
2014-20162020-2022 PCS Awards.In February 2014, weearly March 2020, before the global nature and severity of the COVID-19 pandemic was understood, the Committee established the targets and ranges for the 2014following PCS grants. We continued the use of cumulative revenue growth rate,performance measures: (i) three-year adjusted operating ROEreturn on equity; (ii) three-year adjusted operating income and (iii) three-year Relative ROE as the performancebook value per share, excluding AOCI. These measures in the same weightings as used in the prior year. The performance period for the 2014 PCS grant began on January 1, 2014 and will end on December 31, 2016.
2015-2017PCS Awards. In February 2015, we established the targets and ranges for the 2015 PCS grants. We continued the use of cumulative revenue growth rate, three-year operating ROE and three-year Relative ROE in the same weightings as used in prior years. The performance period for the 2015 PCS grant began on January 1, 2015 and will end on December 31, 2017.
We established the targets and ranges for cumulative revenue growth rate, three-year operating ROE and three-year Relative ROEwere set for the period beginning in 20152020 at levels that are consistent with our intermediate-term goals for those measures. As a result, we believe that achievement ofeach measure. The performance period for the targets2020 PCS grant began on January 1, 2020 and will requireend on December 31, 2022. The Company estimates with a high leveldegree of confidence that the 2020 and 2021 financial and operating performance.
|
| | | | |
| 2015-2017 PERFORMANCE CONTINGENT SHARE GRANTS |
| Performance Measure | Weight | Threshold | Target | Maximum |
| Cumulative Revenue Growth Rate | 33.0% | 0% | 4% | 8% |
Three-Year Operating Return on Equity1 | 33.5% | 9.5% | 11.5% | 13.5% |
| Three-Year Relative Return on Equity | 33.5% | 25th Percentile | 50th Percentile | 75th Percentile |
1See "Use of Non-GAAP Financial Measures" on page 61 for reconciliations to GAAP figures. |
2016-20182021-2023 PCS Awards.In March 2016, we2021, the Committee changed the time period for measurement of PCS performance metrics for the 2021 grants. Rather than measuring Company financial performance on a cumulative basis over a three-year period as done with previous grants, specific financial performance metrics were established for each of 2021 and 2022, with 2023 serving as an additional time vesting period. The Committee established the targets and ranges for the 2016applicable annual PCS grants. Commencing with this plan period, the cumulative revenue growth rate metric will be replaced with cumulative Operating Revenue growth rate, a non-GAAP financial measure, as a basis for establishing target levelsperformance measures: (i) one-year adjusted operating return on equity; (ii) one-year adjusted operating income; and awards. We believe that cumulative Operating Revenue growth rate better(iii) one-year book value per share excluding AOCI. These measures the underlying trends of our continuing operations and management actions, primarily because it may exclude certain transactions undertaken for capital management or risk management purposes (such as retroceded blocks of business). We established the targets and ranges for cumulative Operating Revenue growth rate, three-year operating ROE and three-year Relative ROEwere set for the periodapplicable periods beginning in 20162021 and 2022 respectively at levels that are consistent with our intermediate-term goals for those measures. As a result, we believe that achievement of the targets will require a high level of financial and operating performance.each measure. The performancevesting period for the 20162021 PCS grant began on January 1, 20162021 and will end on December 31, 2018.2023.
| | | | | | | | | | | | | | |
| 2021-2023 PERFORMANCE CONTINGENT SHARE METRICS |
| 2021 Performance Measure | Weight | Threshold | Target | Maximum |
Adjusted Operating Return on Equity1 | 33.5% | 2.7% | 5.7% | 7.2% |
Adjusted Operating Income1 ($M) | 33.5% | $258.2 | $516.3 | $645.4 |
Book Value Per Share, Excluding AOCI1 | 33.0% | $122.18 | $135.75 | $142.54 |
| | | | | | | | | | | | | | |
| 2022 Performance Measure | Weight | Threshold | Target | Maximum |
Adjusted Operating Return on Equity1 | 33.5% | 7.9% | 9.4% | 10.9% |
Adjusted Operating Income1 ($M) | 33.5% | $675.0 | $900.0 | $1,125.0 |
Book Value Per Share, Excluding AOCI1 | 33.0% | $129.93 | $144.37 | $151.59 |
1See "Use of Non-GAAP Financial Measures" on page 84 for reconciliations from GAAP figures to adjusted operating figures. |
2021 Special One-Time Award. The Committee determined that a one-time equity award to named executive officers and other executives was necessary for the engagement of our executive team to advance our strategic objectives and to recognize the performance of our leaders in navigating the Company through the COVID-19 pandemic. Absent this additional one-time equity award, the impacts to total realized compensation on the Company’s executive officers are material and long-lasting, presenting significant challenges in the retention and engagement of key talent, as demonstrated above under “2021 COVID-19 Impact and Paying for Performance — Realizable CEO Pay”. The Committee believes that this one-time grant better aligns pay and performance for participants in the Flexible Stock Plan.
For the named executive officers, the one-time equity award consists of two components of equal size: a performance share unit (“PSU”) grant and a restricted share unit (“RSU”) grant.
The PSU awards will fully vest (i.e., “cliff vest”) for individuals employed with the Company on December 31, 2022 and pay out in shares of the Company’s common stock. Vesting of the PSU awards is subject to a performance condition which requires the Company to achieve financial results that are within a pre-determined range for at least two of the following measures during either 2021 or 2022: adjusted operating return on equity; adjusted operating income; or book value per share, excluding AOCI. The plan metrics require robust financial performance when considering the ongoing impacts of the COVID-19 pandemic, with 2022 targets reflecting financial performance that aligns with a pre-pandemic business environment. If the performance condition is not met, there will be no payout under the award. Achieving this performance condition will cause the full value of the award to vest. No additional amounts will be paid if Company performance exceeds the financial goals.
The RSU awards will cliff-vest after two years for individuals employed with the Company on December 31, 2022 and will be paid in shares of the Company's common stock. The following table describes the 2021 Special One-Time PSU and RSU awards for the named executive officers, granted on March 11, 2021.
2021 PSU AND RSU GRANTS | | | | | | | | |
| Name | Number of PSUs Granted | Number of RSUs Granted |
| Anna Manning | 27,130 | 27,130 |
| Todd C. Larson | 5,930 | 5,930 |
| Leslie Barbi | 1,570 | 1,570 |
| Tony Cheng | 2,732 | 2,732 |
Ronald Herrmann1 | — | — |
| Alain P. Néemeh | 6,201 | 6,201 |
1Due to the timing of Mr. Herrmann joining the Company, he was not eligible to receive these grants. |
2022-2024 PCS Award. In March 2022, the Committee established the target and ranges for the following PCS performance measures: (i) three-year adjusted operating return on equity and (ii) three-year book value per share, excluding AOCI. These results may be modified up or down by a maximum of 10% based on three-year relative total shareholder return. These measures were set for the period beginning in 2022 at levels that are consistent with our intermediate term-goals for each measure. The performance period for the 2022 PCS grant began on January 1, 2022 and will end on December 31, 2024.
2016 PERFORMANCE CONTINGENT SHARE GRANTS | | | | | |
| 2022 PCS AWARDS | |
| Name | Number of PCS Granted |
A. Greig Woodring1
| 42,500 |
Jack B. Lay | 6,158 |
| Anna Manning | 16,038 |
Alain P. Néemeh | 5,812 |
Donna H. Kinnaird | 5,81229,334 |
| Todd C. Larson | 5,8126,970 |
| Leslie Barbi | 5,632 |
| Tony Cheng | 3,617 |
| Ronald Herrmann | 3,548 |
1 As disclosed in the Company’s Current Report on Form 8-K filed with the SEC on March 8, 2016, the PCS award granted to Mr. Woodring will vest on December 31, 2016.
Compensation Element #4 - Stock Appreciation Rights ("SARs")Based Awards
20152021 SARs Grant. In March 2015, we2021, the Committee approved the 20152021 annual SARsStock Appreciation Rights ("SARs") awards for our named executive officers.officers and other company executives. The vesting schedule for the annual SARs grant is four years (vesting 25% at the end of each of the first four years)year). We made these grants because we believe that SARs are an appropriate vehicle for providing long-term value to participants because of the alignment to long-term shareholder value. The SARs granted inon March 201511, 2021 have a strike price of $90.06,$129.01, which was the closing price of our stock on the date the grants were approved. The grants were made pursuant to the terms of the Flexible Stock Plan and award agreements. See "Compensation Tables and Other Matters - Grants of Plan-Based Awards in 201205"20" for a description of the 20152021 annual SARs grants.
The following table describes the 20152021 annual SARs awards for the named executive officers:officers, granted on March 11, 2021.
2021 SARs GRANTS2015 SARs GRANTS |
| | | | |
| Name | Number of SARs Granted |
A. Greig WoodringAnna Manning | 43,43541,154 |
Jack B. LayTodd C. Larson | 8,7618,771 |
| Leslie Barbi | 5,762 |
| Tony Cheng | 3,491 |
| Ronald Herrmann | 5,153 |
| Alain P. Néemeh* | 8,771 |
| *Mr. Néemeh received net-settled stock options in lieu of SARs. |
2021 RSU Grant. In March 2021, the Committee approved the 2021 annual Restricted Share Unit (“RSU”) awards for our named executive officer and other company executives. The cliff-vesting schedule for the annual RSU grant is three years from January 1, 2021. The RSU awards will fully vest for individuals employed with the Company on December 31, 2023 and pay out in shares of the Company’s common stock.
The following table describes the 2021 annual RSU awards for the named executive officers, granted on March 11, 2021.
2021 RSU GRANTS | | | | | |
| Name | Number of RSUs Granted |
| Anna Manning | 8,34011,143 |
| Todd C. Larson | 2,375 |
| Leslie Barbi | 1,560 |
| Tony Cheng | 945 |
| Ronald Herrmann | 1,395 |
| Alain P. Néemeh | 8,340 |
Donna H. Kinnaird | 8,3402,375 |
Additional2022 SARs grants were made to Ms. Manning and Mr. Néemeh in December 2015. For more information see "Compensation Discussion and Analysis - 2015 Compensation Actions and Results - 2015 Special Grants."
2016SARs GrantRSU Grants. In March 2016, we2022, the Committee approved the 20162022 annual SARs and RSU awards for the named executive officers, as follows:
2022 SARs AND RSU GRANTS | | | | | | | | |
| Name | Number of SARs Granted | Number of RSUs Granted |
| Anna Manning | 51,146 | 14,667 |
| Todd C. Larson | 12,152 | 3,485 |
| Leslie Barbi | 9,820 | 2,816 |
| Tony Cheng | 6,306 | 1,808 |
| Ronald Herrmann | 6,187 | 1,774 |
2016 SARs GRANTS |
| |
Name | Number of SARs Granted |
A. Greig Woodring | 70,704 |
Jack B. Lay | 10,245 |
Anna Manning | 26,681 |
Alain P. Néemeh | 9,669 |
Donna H. Kinnaird | 9,669 |
Todd C. Larson | 9,669 |
The vesting schedule for the annual SARs grant is four years (vesting 25% at the end of each year). The SARs have a strike price of $93.53, which was the closing price of our stock on March 4, 2016, the date the grants were approved.
Compensation Element #5 - Retirement and Pension Benefits
For 20152021, and in compliance with the terms of the plans described herein, our named executive officers received Company contributions, (where applicable)where applicable, based upon their completion of a year of credited service and compensation (base pay and cash bonus)ABP payments for U.S. and Canadian plans) earned. Additionally, the contributions made by the Company on their behalf were in compliance with the U.S. Internal Revenue Code andfor US executive officers, the Canadian Income Tax Act and other provincial legislation for the Canadian executive officers and the Basic Law of Hong Kong and the Hong Kong Mandatory Provident Fund Schemes Authority Ordinance (Cap 485) for the Hong Kong executive
officers.
U.S. Plans
Under the qualified and non-qualified Pension Plans and Savings Plans, and assuming a retirement on December 31, 2015,2021, the named executive officers would be eligible to receive the benefits are listed below:
Qualified and Non-qualified Pension Plans. As of the completion of 2015, Messrs. Woodring2021, Ms. Manning and Lay and Ms. KinnairdMr. Larson met the vesting and normal retirement eligibilityrequirements of the plans and are therefore eligible to receive their Performance Pension Account benefits in both the benefitsU.S. Pension Plan and the Augmented Benefit Plan upon the termination of their employment with the Company and in accordance with the plan guidelines.terms of the plans. Mr. Cheng met the vesting requirements of the U.S. Pension Plan and is eligible to receive his Performance Pension Account benefit upon the termination of his employment with the Company in accordance with the terms of the plan.
Qualified and Non-qualified Savings Plans. As of the completion of 2015, Messrs. Woodring2021, Mses. Manning and LayBarbi and Ms. KinnairdMr. Larson met the vesting requirements of the Qualifiedplans and Non-qualifiedare therefore eligible to receive the benefits from both the U.S. Savings PlansPlan and at retirement may choose to retain the accounts as administered byAugmented Benefit Plan upon the termination of their employment with the Company or rollin accordance with the funds to accounts outsideterms of the plans. As of the completion of 2021, Mr. Herrmann had not fully met the vesting requirements of the plans and is therefore not eligible to receive full benefits from either the U.S. Savings Plan or the Augmented Benefit Plan upon termination of his employment with the Company in accordance with the terms of the plans.
Canadian Plans
Under the Registered Pension Plan and the DB SERP, and assuming a retirement on December 31, 2015,2021, the Canadian named executive officers who would be eligible to receive benefits are listed below:
Registered Pension Plan. As of the completion of 2021, Ms. Manning meets the vesting and early retirement eligibility requirements and is eligible to receive the benefits in accordance towith the plan guidelines. Mr. Néemeh does not yet meet the early retirement eligibility criteria.
Defined Benefit Supplemental Executive Retirement Plan. As of the completion of 2021, Ms. Manning meetsand Mr. Néemeh meet the vesting and early retirement eligibility requirements and isare eligible to receive the benefits in accordance towith the plan guidelines. Effective January 1, 2020, no new executives may participate in the DB SERP.
Hong Kong Plan
As of the completion of 2021, Mr. Néemeh does not yet meetCheng met the early retirement eligibility criteria.
2015 Special Grants
In connectionvesting requirements of the plan and is therefore eligible to receive benefits from the employer voluntary contribution supplementary benefit fund upon the termination of his employment with the appointmentCompany, in accordance with the terms of the plan. Mr. Cheng will be eligible to receive benefits from the employee and employer mandatory contribution benefit fund upon his retirement, based on the provisions set forth in the Hong Kong Mandatory Provident Fund.
Other Retirement Benefits
Ms. Manning is eligible to President ofreceive the Companybenefits provided in the Supplemental Payment Agreement, dated July 25, 2019, in accordance with the terms set out therein. Information on the Supplemental Payment Agreement can be found under "Compensation Element #5 - Retirement and the leadership transitions arising from Mr. Woodring's expected retirement at the end of 2016, on December 1, 2015 the Committee awarded an additional grant of SARs to Ms. Manning valued at $3,000,000 (153,453 SARs) that will fully vest on November 30, 2020. On December 1, 2015, the Committee also granted SARs to Mr. Néemeh, valued at $2,000,000 (102,302 SARs), which vest fully on November 30, 2020. On the same date, the Committee granted Restricted Share Units to Ms. Kinnaird. Ms. Kinnaird’s grant was valued at $600,000 (6,437 RSUs)Pension Benefits - Non-qualified and fully vests on January 11, 2017.Supplemental Plans - U.S. - Supplemental Payment Agreement."
39
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the portions of this Compensation Discussion and Analysis described in Regulation S-K Item 402(b) be included in this Proxy Statement. This report is provided by the following independent directors, who comprise the Committee as of the date of this Proxy Statement:
John F. Danahy, ChairmanHazel M. McNeilage, Chair
J. Cliff EasonPina Albo
Joyce A. PhillipsChristine R. Detrick
Fred J. SievertShundrawn Thomas
Stanley B. Tulin
COMPENSATION TABLES AND OTHER MATTERS
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal Position
| Year
| Salary1
| Bonus2
| Stock Awards3
| Option Awards4
| Non-Equity Incentive Plan Compensation5
| Change in Pension Value and Nonqualified Deferred Compensation Earnings6 | All Other Compensation7
| Total
|
Anna Manning President and CEO | 2021 | $1,030,000 | — | $6,375,029 | $6,375,109 | $1,504,315 | $635,367 | $189,695 | $16,109,515 |
| 2020 | $1,030,000 | — | $4,312,485 | $1,444,174 | $1,390,500 | $617,725 | $249,349 | $9,044,233 |
| 2019 | $1,025,385 | — | $3,375,029 | $989,547 | $2,144,954 | $404,102 | $177,258 | $8,116,275 |
Todd C. Larson Sr. EVP and CFO | 2021 | $645,000 | — | $1,377,827 | $1,377,799 | $628,017 | $305,797 | $93,685 | $4,428,125 |
| 2020 | $636,346 | — | $919,112 | $307,796 | $580,500 | $360,017 | $109,992 | $2,913,763 |
| 2019 | $596,154 | — | $742,518 | $217,692 | $832,992 | $315,487 | $101,994 | $2,806,837 |
Leslie Barbi EVP & Chief Investment Officer | 2021 | $575,000 | — | $605,057 | $605,068 | $808,278 | — | $108,595 | $2,701,998 |
| 2020 | $561,731 | — | $603,746 | $202,180 | $452,333 | — | $302,721 | $2,122,711 |
Tony Cheng EVP, Head of Asia, Australia and EMEA | 2021 | $612,414 | — | $596,284 | $596,310 | $366,196 | $686 | $302,763 | $2,474,653 |
| 2020 | $609,766 | — | $367,456 | $123,043 | $384,126 | $661 | $300,284 | $1,785,336 |
| 2019 | $580,299 | $800,000 | $352,086 | $103,222 | $477,421 | $634 | $288,940 | $2,602,602 |
Ronald Herrmann EVP , Head of U.S. and Latin American Markets | 2021 | $600,000 | — | $359,938 | $359,963 | $662,706 | — | $66,623 | $2,049,230 |
Alain P. Néemeh Former Sr. EVP and COO | 2021 | $697,716 | — | $1,412,789 | $1,412,761 | — | $244,124 | $827,859 | $4,595,249 |
| 2020 | $640,833 | — | $919,112 | $307,796 | $580,500 | $913,754 | $50,236 | $3,412,231 |
| 2019 | $616,667 | — | $767,211 | $224,951 | $860,759 | $2,105,409 | $50,893 | $4,625,890 |
|
| | | | | | | | | |
Name and Principal Position
| Year
| Salary1
| Bonus
| Stock Awards2
| Option Awards3
| Non-Equity Incentive Plan Compensation4
| Change in Pension Value and Nonqualified Deferred Compensation Earnings5
| All Other Compensation6
| Total
|
A. Greig Woodring CEO | 2015 | $1,117,692 | --- | $2,775,019 | $1,305,222 | $1,431,875 | $2,697,661 | $43,510 | $9,370,979 |
| 2014 | $1,056,154 | --- | $2,499,745 | $1,046,343 | $2,681,927 | $2,119,230 | $66,916 | $9,470,315 |
| 2013 | $1,035,385 | --- | $1,400,019 | $1,267,843 | $479,482 | $105,030 | $85,059 | $4,372,818 |
Jack B. Lay Sr. EVP and CFO | 2015 | $642,025 | --- | $559,723 | $263,268 | $634,302 | $573,827 | $103,791 | $2,776,936 |
| 2014 | $598,104 | --- | $541,747 | $226,764 | $1,054,388 | $396,351 | $63,628 | $2,880,982 |
| 2013 | $579,994 | --- | $349,153 | $316,213 | $201,227 | $138,916 | $90,178 | $1,675,681 |
Anna Manning President | 2015 | $521,811 | --- | $532,795 | $3,250,617 | $560,923 | $650,738 | $11,845 | $5,528,729 |
Alain P. Néemeh Sr. EVP | 2015 | $498,566 | --- | $532,795 | $2,250,617 | $560,923 | $668,312 | $15,276 | $4,526,489 |
Donna H. Kinnaird Sr. EVP and COO | 2015 | $585,115 | --- | $1,132,788 | $250,617 | $577,751 | $170,060 | $36,503 | $2,752,834 |
| 2014 | $535,750 | --- | $397,815 | $166,527 | $856,350 | $80,401 | $57,764 | $2,094,607 |
| 2013 | $513,269 | --- | $257,471 | $233,198 | $158,290 | $117,660 | $477,823 | $1,757,711 |
| |
1. | 1.This column includes any amounts deferred at the election of the named executive officers under the Company's Executive Deferred Savings Plan and retirement Savings Plan. For 2021, the base salary for Mr. Néemeh was determined in USD and converted to CAD on a monthly basis. Mr. Néemeh's base salary for 2021 also includes accrued but unused vacation time that was paid out. For 2021, the base salary for Mr. Cheng was determined in HKD and converted to USD using an average monthly foreign exchange rate.
2.This column represents cash awards paid to our named executive officers. Pursuant to the terms of a Cash Retention Award Agreement, entered into between the Company and Mr. Cheng on January 9, 2015, Mr. Cheng received a gross cash payment of $800,000, less applicable withholding taxes and deductions, in January 2020, following the completion of his continuous employment terms, as set forth in the agreement. 3.This column represents the grant date fair value of PCS and PSU awards granted in such year, using probable outcomes of performance conditions, in accordance with Accounting Standards Codification: 718 – Compensation – Stock Compensation ("ASC 718"). For additional information on the valuation assumptions, refer to note 17 of the Company's financial statements in the Form 10-K for the year ended December 31, 2021, as filed with the SEC. See also "Grants of the executive officers under the RGA Reinsurance Company Executive Deferred Savings Plan. For Mr. Néemeh and Ms. Manning, the base salary reflects the Canadian salaries paid over the year taking into consideration monthly foreign exchange rates to convert to USD. |
| |
2. | This column represents the grant date fair value of PCS units granted in such year, using probable outcomes of performance conditions, in accordance with Accounting Standards Codification: 718 – Compensation – Stock Compensation ("ASC 718"). For additional information on the valuation assumptions, refer to note 16 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2015, as filed with the SEC. See also "Grants of Plan-Based Awards in 2015" for information on awards made in 2015. These amounts reflect the grant date fair value for these awards, and do not correspond to the actual value that may be recognized by the named executive officers. |
| |
3. | This column represents the grant date fair value of SARs and RSUs granted in such year, in accordance with ASC 718. For additional information on the valuation assumptions, refer to note 16 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2015, as filed with the SEC. See also "Grants of |
Plan-Based Awards in 2015"2021" for information on SARs grantedawards made in March 2015 and "Compensation Discussion and Analysis - 2015 Compensation Actions and Results - 2015 Special Grants" for information on SARs and RSUs granted in December 2015.2021. These amounts reflect the grant date fair value for these awards, and do not correspond to the actual value that may be recognized by the named executive officers. | |
4. | Includes for all named executive officers, cash incentives earned for performance during each fiscal year and paid in March of the following year (including any incentives deferred at the election of the executive officers) under the Annual Bonus Plan. |
| |
5. | This column represents the sum of the change in pension value in each fiscal year for each of the named executive officers. The increase in Mr. Woodring’s change in pension value is attributed to his tenure with the Company and his age. The pension benefit increases in value as a participant nears the age of 65. The increase in the pension value for 2015, relative to prior years is due to changes in the interest rate assumptions, thus reducing the present value. We do not pay above-market or preferential earnings on any account balances; therefore, this column does not reflect any amounts relating to nonqualified deferred compensation earnings. See the "Pension Benefits in 2015" and "Nonqualified Deferred Compensation in 2015" tables for additional information. |
Due to the impact of the COVID-19 pandemic on the Company’s 2020 and 2021 financial results, Company financial performance for the 2019-2021 PCS performance period (awards granted in 2019) was below the threshold required for payment with respect to each of the three metrics, resulting in a zero payout overall. Additionally, As a result of: (i) the COVID-19 pandemic’s impact on the Company’s 2020 and 2021 financial performance, (ii) the financial metrics being established prior to the pandemic, (iii) the cumulative nature of the financial metrics for each PCS plan cycle, and (iv) the degree of stretch performance that is built into the PCS performance metrics, the Company estimates with a high degree of confidence that payout for the PCS awards granted in 2020 will also be zero.
4.This column represents the grant date fair value of SARs and RSUs granted in such year, in accordance with ASC 718. For additional information on the valuation assumptions, refer to note 17 of the Company's financial statements in the Form 10-K for the year ended December 31, 2021, as filed with the SEC. See also "Grants of Plan-Based Awards in 2021" for information on SARs granted in March 2021. These amounts reflect the grant date fair value for these awards and do not correspond to the actual value that may be recognized by the named executive officers.
5.Includes for all named executive officers, cash incentives earned for performance during each fiscal year and paid in March of the following year (including any incentives deferred at the election of the executive officers) under the Annual Bonus Plan.
6.This column represents the sum of the change in pension value in each fiscal year for each of the named executive officers. The increase in pension value for 2021 is attributable to service and compensation increases, offset in part by assumption changes from the prior year. The Company does not pay above-market or preferential earnings on any account balances; therefore, this column does not reflect any amounts relating to nonqualified deferred compensation earnings. See the "Pension Benefits in 2021" and "Nonqualified Deferred Compensation in 2021" tables for additional information.
The change in pension value for the Canadian named executive officers (Ms. Manning and Mr. Néemeh),emeh represents the sum of the change in pension value in each fiscal year for the defined contribution plan and thebenefit supplemental executive retirement plan (SERP)(Canadian DB SERP). The change in pension value for the RGA Canadian defined contribution plan is due to employer and employee contributions as well as overall fund performance. The change in pension value for the Canadian executive retirement plan (SERP)Defined Benefit Plan SERP is due to changes in interest rate assumptions, as well service accrual and changes in the average pensionable earnings. The value of Mr. Néemeh’s DB SERP as of December 31, 2021 reflects the special termination agreement that grants him credited service under the plan through September of 2023. The accumulated value of the RGA Canadian Defined Benefit Plan SERP is calculated by converting the participant’s accrued annuity benefit under the plan to an actuarial equivalent present value amount as of the measurement date. The interest rate assumption used for this conversion has a material impact on the calculation. As a result, significant changes in interest rates from year to year can lead to material changes to the accumulated value of the benefit.
| |
6. | Amount includes contributions by RGA Reinsurance Company to the officers’ accounts in qualified and nonqualified plans for the 2015 plan year. Includes life insurance premiums paid by RGA Reinsurance Company on behalf of Messrs. Woodring, Lay and Ms. Kinnaird. Also includes Company match contributions for 2015 under the Savings Plan of $13,250, for Messrs. Woodring, Lay and Ms. Kinnaird. Messrs. Woodring, Lay and Ms. Kinnaird also made qualified employee contributions of $18,000. |
The change in pension value for Ms. Manning represents the sum of the change in pension value for the U.S. Pension Plans as well as the RGA Canadian Defined Benefit Plan SERP. Ms. Manning has not accrued additional benefits under the RGA Canadian Defined Benefit Plan SERP plan since her transfer to the U.S. in April 2016. However, the present value of the plan benefit is affected by changes in interest rate assumptions.
For Ms. Manning, this column also includes the accrual value of a supplemental payment to be paid upon her retirement from the Company, as an acknowledgment of the financial implications on her retirement benefits with respect to her relocation to the U.S. from Canada in 2016. The supplemental payment represents the difference between (i) the value of the Company-provided benefits that she would have received upon her retirement had she worked her entire career (starting upon her hire date in 2007 through retirement) in the U.S., and (ii) the value of Company-provided benefits that she will actually receive upon retirement from the Company. For this purpose, Company-provided benefits include any savings, pension or deferred compensation benefits funded by the Company based on her deferrals of pay, additional non-elective contributions to company retirement accounts and any subsequent investment returns credited to those deferred compensation accounts based on contribution from the Company. The value of any salary deferrals by Ms. Manning, including any subsequent investment return credited to those retirement accounts for those salary deferrals, is not included in the calculation of this supplemental payment. This payment will be a single lump sum payment made in U.S. dollars after Ms. Manning’s retirement from the Company. See "Compensation Element #5 - Retirement and Pension Benefits - Non-qualified and Supplemental Plans - U.S. - Supplemental Payment Agreement" for more information.
Mr. Cheng accrued a benefit in the U.S. pension plan prior to his transfer outside of the country in 2002. Mr. Cheng does not accrue additional benefits in the plan, but his Performance Pension Account continues to increase with interest each year.
7.Amount includes contributions by the Company to the officers' accounts in qualified and nonqualified plans for the 2021 plan year. Includes life insurance premiums paid by the Company on behalf of Ms. Manning in the amount of
$13,203, Mr. Larson in the amount of Contents$7,900, Ms. Barbi in the amount of $5,862, and Mr. Herrmann in the amount of $6,623. Amount also includes additional disability premiums paid by the Company on behalf of Mr. Néemeh in the amount of $36,006, as well as Company contributions of $11,553 to the Registered Pension Plan. Amount includes Company contributions on behalf of Mr. Cheng to the Mandatory Provident Fund in the amount of $66,141.
Includes Company contributions for 2021 under the Savings Plan of $29,000 for Ms. Barbi and Mr. Herrmann, $20,300 for Ms. Manning and Messrs. Larson. Also includes Company contributions for 2021 under the Augmented Savings Plans of $42,610 for Ms. Manning, $18,710 for Mr. Larson, $36,867 for Ms. Barbi and $15,500 for Mr. Herrmann. Includes Company matching contributions for 2021 under the Executive Deferred Savings Plan ("EDSP") of $106,525 for Ms. Manning, $46,775 for Mr. Larson, $36,867 for Ms. Barbi and $15,500 for Mr. Herrmann.
In 2021, Mr. Cheng received a total of $228,758 for local allowances, of which $37,407 was for education and $191,351 was for housing. Allowances are benefits offered to select executives in Hong Kong and are reviewed on an annual basis to ensure compensation in Hong Kong remains market competitive.
For 2021, amount includes foreign tax preparation taxable benefit amount grossed up for taxes for Ms. Manning in the amount of $5,127. Amount includes foreign tax preparation taxable benefit amount for Mr. Néemeh grossed up for taxes in the amount of $1,605. Amount also includes professional dues paid by the Company on behalf of Ms. Manning for $1,930, Mr. Néemeh for $890, and Mr. Cheng for $1,015. Amount also includes fees paid by the Company for parking for Mr. Néemeh in the amount of $3,805. Amount includes fees paid by the Company for club memberships including the use of a fitness facility for Mr. Cheng in the amount of $6,849.
Pursuant to the terms of Mr. Néemeh’s separation from the Company, a cash payment in lieu of the Company’s Annual Bonus Plan was provided in the amount of $774,000.
Grants of Plan-Based Awards in 20152021
This table provides the following information about equity and non-equity awards granted to the named executive officers in 2015:2021: (1) the grant date; (2) the estimated future payouts under non-equity incentive plan awards, which consist of potential payouts under the Annual Bonus Plan award granted in 20152021 for the 20152021 performance period; (3) estimated future payouts under equity incentive plan awards, which consist of potential payouts under the PCS grants in 20152021 for the 2015-20172021-2023 performance period; (4) all other option awards, which consist of the SARs and Restricted Stock Unit ("RSU")RSU awards granted to the named executive officers in 2015;2021; (5) the strike price of the SARs granted, which reflects the closing price of Company stock on the date of grant and (6) the grant date fair value of each equity grant calculated under ASC 718.
| GRANTS OF PLAN-BASED AWARDS IN 2015 |
| | | | | | | | | | | |
| Name | Grant Date | Estimated Future Payments Under Non-Equity Incentive Plan Awards¹ | Estimated Future Payments Under Equity Incentive Plan Awards (Number of Shares)² | All Other Stock Awards: Number of Shares of Stock or Units3 | All Other Option Awards: Number of Securities Underlying Options4
| Exercise of Base Price of Option Awards5
| Grant Date Fair Value of Stock and Option Awards6
|
| Threshold | Target | Maximum | Threshold | Target | Maximum |
A. Greig Woodring | 3/6/2015 | $702,000 | $1,404,000 | $2,808,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 15,407 | 30,813 | 61,626 | --- | --- | --- | $2,775,019 |
| --- | --- | --- | --- | --- | --- | --- | 43,435 | $90.06 | $1,305,222 |
Jack B. Lay | 3/6/2015 | $310,975 | $621,950 | $1,243,900 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 3,108 | 6,215 | 12,430 | --- | --- | --- | $559,723 |
| --- | --- | --- | --- | --- | --- | --- | 8,761 | $90.06 | $263,268 |
| Anna Manning | 3/6/2015 | $275,000 | $550,000 | $1,100,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 2,958 | 5,916 | 11,832 | --- | --- | --- | $532,795 |
| --- | --- | --- | --- | --- | --- | --- | 8,340 | $90.06 | $250,617 |
| 12/1/2015 | --- | --- | --- | --- | --- | --- | --- | 153,453 | $93.21 | $3,000,000 |
Alain P. Néemeh
| 3/6/2015 | $275,000 | $550,000 | $1,100,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 2,958 | 5,916 | 11,832 | --- | --- | --- | $532,795 |
| --- | --- | --- | --- | --- | --- | --- | 8,340 | $90.06 | $250,617 |
| 12/1/2015 | --- | --- | --- | --- | --- | --- | --- | 102,302 | $93.21 | $2,000,000 |
| Donna H. Kinnaird | 3/6/2015 | $283,250 | $566,500 | $1,133,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 2,958 | 5,916 | 11,832 | --- | --- | --- | $532,795 |
| --- | --- | --- | --- | --- | --- | --- | 8,340 | $90.06 | $250,617 |
| 12/1/2015 | --- | --- | --- | --- | --- | --- | 6,437 | --- | --- | $599,993 |
| |
1. | These columns reflect the potential value of the payment for 2015 performance under the ABP for each named executive if the minimum, target or maximum goals are satisfied. The potential payments are performance-driven and are therefore completely at risk. The performance measures, salary and bonus multiples for determining the payments are described in the CD&A. The bonus amount for actual 2015 performance was determined in March 2016 based on the metrics described in the CD&A and is included in the "Summary Compensation Table" in the column titled "Non-Equity Incentive Plan Compensation." |
| |
2. | This column reflects the number of PCS units granted in March 2015 under our Flexible Stock Plan, which may convert into shares of Company stock at the end of the three-year performance period if the specified performance levels are achieved. The performance period commenced January 1, 2015 and ends December 31, 2017. If the threshold level of performance is met, the award of shares starts at 50% (target is 100% and maximum is 200%).
|
| |
3. | This column reflects the number of RSUs granted to Ms. Kinnaird in December 2015, which vest fully on January 11, 2017. See discussion of PCS awards and 2015 Special Grants in "Compensation Discussion and Analysis - 2015 Compensation Actions and Results - 2015 Special Grants." |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GRANTS OF PLAN-BASED AWARDS IN 2021 |
| Name | Grant Date | Estimated Future Payments Under Non-Equity Incentive Plan Awards¹ | Estimated Future Payments Under Equity Incentive Plan Awards (Number of Shares)² | All Other Stock Awards: Number of Shares of Stock or Units3 | All Other Option Awards: Number of Securities Underlying Options4
| Exercise of Base Price of Option Awards5
| Grant Date Fair Value of Stock and Option Awards6
|
| Threshold | Target | Maximum | Threshold | Target | Maximum |
| Anna Manning | 3/11/2021 | $927,000 | $1,854,000 | $3,708,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 11,143 | 22,285 | 44,570 | --- | --- | --- | $2,874,988 |
| --- | --- | --- | 27,130 | 27,130 | 27,130 | --- | --- | --- | $3,500,041 |
| --- | --- | --- | --- | --- | --- | 11,143 | --- | --- | $1,437,558 |
| --- | --- | --- | --- | --- | --- | 27,130 | --- | --- | $3,500,041 |
| --- | --- | --- | --- | --- | --- | --- | 41,154 | $129.01 | $1,437,509 |
| Todd C. Larson | 3/11/2021 | $387,000 | $774,000 | $1,548,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 2,375 | 4,750 | 9,500 | --- | --- | --- | $612,798 |
| --- | --- | --- | 5,930 | 5,930 | 5,930 | --- | --- | --- | $765,029 |
| --- | --- | --- | --- | --- | --- | 2,375 | --- | --- | $306,399 |
| --- | --- | --- | --- | --- | --- | 5,930 | --- | --- | $765,029 |
| --- | --- | --- | --- | --- | --- | --- | 8,771 | $129.01 | $306,371 |
| Leslie Barbi | 3/11/2021 | $287,500 | $575,000 | $1,150,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 1,560 | 3,120 | 6,240 | --- | --- | --- | $402,511 |
| --- | --- | --- | 1,570 | 1,570 | 1,570 | --- | --- | --- | $202,546 |
| --- | --- | --- | --- | --- | --- | 1,560 | --- | --- | $201,256 |
| --- | --- | --- | --- | --- | --- | 1,570 | --- | --- | $202,546 |
| --- | --- | --- | --- | --- | --- | --- | 5,762 | $129.01 | $201,267 |
| Tony Cheng | 3/11/2021 | $183,098 | $366,196 | $732,393 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 945 | 1,890 | 3,780 | --- | --- | --- | $243,829 |
| --- | --- | --- | 2,732 | 2,732 | 2,732 | --- | --- | --- | $352,455 |
| --- | --- | --- | --- | --- | --- | 945 | --- | --- | $121,914 |
| --- | --- | --- | --- | --- | --- | 2,732 | --- | --- | $352,455 |
| --- | --- | --- | --- | --- | --- | --- | 3,491 | $129.01 | $121,941 |
Ronald Herrmann1 | 3/11/2021 | $300,000 | $600,000 | $1,200,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 1,395 | 2,790 | 5,580 | --- | --- | --- | $359,938 |
| --- | --- | --- | --- | --- | --- | 1,395 | --- | --- | $179,969 |
| --- | --- | --- | --- | --- | --- | --- | 5,153 | $129.01 | $179,994 |
| Alain P. Néemeh | 3/11/2021 | $387,000 | $774,000 | $1,548,000 | --- | --- | --- | --- | --- | --- | --- |
| --- | --- | --- | 2,375 | 4,750 | 9,500 | --- | --- | --- | $612,798 |
| --- | --- | --- | 6,201 | 6,201 | 6,201 | --- | --- | --- | $799,991 |
| --- | --- | --- | --- | --- | --- | 2,375 | --- | --- | $306,399 |
| --- | --- | --- | --- | --- | --- | 6,201 | --- | --- | $799,991 |
| --- | --- | --- | --- | --- | --- | --- | 8,771 | $129.01 | $306,371 |
1Due to the timing of Mr. Herrmann joining the Company, he was not eligible to receive the special one-time 2021 RSU and PCS awards granted in March 2021. |
1. These columns reflect the potential value of Contentsthe payment for 2021 performance under the ABP for each named executive if the minimum, target or maximum goals are satisfied. The potential payments are performance-driven and are therefore completely at risk. The performance measures, salary and ABP multiples for determining the payments are described in the CD&A. The ABP payment amount for actual 2021 performance was determined in March 2022 based on the metrics described in the CD&A and is included in the "Summary Compensation Table" in the column titled "Non-Equity Incentive Plan Compensation." 2. This column reflects the number of PCS units granted in March 2021, which may convert into shares of Company stock at the end of the three-year performance period if the specified performance levels are achieved. The performance period commenced January 1, 2021 and ends December 31, 2023. If the threshold level of performance is met, the award of shares starts at 50% (target is 100% and maximum is 200%). This column also reflects the number of a special one-time PSU award granted in March 2021, which will fully vest for individuals employed with the Company on December 31, 2022 and payout in shares of Company stock at the end of the two-year performance period. The performance period commenced January 1, 2021 and ends December 31, 2022. If the performance condition is not met, there will be no payout under the award. No additional amounts will be paid if Company performance exceeds the financial goals. See discussion of PSU awards and 2021 Special Grants in "Compensation Discussion and Analysis - 2021 Compensation Actions and Results - Compensation Element #3 - Performance Contingent Awards."
3. This column reflects the number of RSUs granted in March 2021, which vest over a three-year period beginning January 1, 2021 and ends on December 31, 2023. This column also includes the number of special one-time RSUs granted in March 2021, which fully vest for individuals employed with the Company on December 31, 2022. See discussion of RSU awards and 2021 Special Grants in "Compensation Discussion and Analysis - 2021 Compensation Actions and Results - 2021 Special Grants."
4. This column reflects the number of SARs granted in March 2021, which vest and become exercisable in four equal annual installments of 25%, beginning on December 31, 2021.
5. This column reflects the strike price per share of common stock for the SARs granted, which is the closing price of the common stock on March 11, 2021, the date the Committee approved the grants.
6. This column reflects the full grant date fair value of the performance contingent awards under ASC 718, the full grant date fair value of the RSUs and the SARs under ASC 718 granted to the named executive officers in 2021. See notes 3 and 4 of the "Summary Compensation Table" for a discussion of fair value calculation related to the performance contingent awards, RSUs and SARs respectively. For PCS units and PSU awards with the grant date of March 11, 2021, the fair value is calculated using the closing price of Company stock of $129.01. For SARs with a grant date of March 11, 2021, fair value is calculated using the Black-Scholes value of $34.93. For additional information on the valuation assumptions, refer to note 17 of the Company's financial statements in the Form 10-K for the year ended December 31, 2021, as filed with the SEC. These amounts reflect the grant date fair value, and do not correspond to the actual value that will be recognized by the named executive officers. Both the PCS and PCU awards are subject to specified performance objectives over the applicable performance periods, the results of which will determine the amount of payouts, if any, under such awards. | |
4. |
This column reflects the number of SARs granted in March 2015 and December 2015. The March 2015 SARs vest and become exercisable in four equal annual installments of 25%, beginning on December 31, 2015. The December 2015 SARs granted to Ms. Manning and Mr. Néemeh vest fully on November 30, 2020.
|
| |
5. | This column reflects the strike price per share of common stock for the SARs granted, which is the closing price of the common stock on March 6, 2015 and December 1, 2015, the dates the Compensation Committee approved the grants.
|
| |
6. | This column reflects the full grant date fair value of PCS units under ASC 718 and the full grant date fair value of SARs under ASC 718 granted to the named executive officers in 2015. See notes 2 and 3 of the "Summary Compensation Table" for a discussion of fair value calculation related to the PCS and SARs respectively. For PCS units with the grant date of March 6, 2015, fair value is calculated using the closing price of Company stock of $90.06. For SARs with a grant date of March 6, 2015, fair value is calculated using the Black-Scholes value of $30.05. For SARs with a grant date of December 1, 2015, fair value is calculated using the Black-Scholes value of $19.55. For additional information on the valuation assumptions, refer to note 16 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2015, as filed with the SEC. These amounts reflect the grant date fair value, and do not correspond to the actual value that will be recognized by the named executive officers. For example, the PCS units are subject to specified performance objectives over the performance period, with 33.0% tied to cumulative revenue growth rate, 33.5% tied to three-year operating ROE and 33.5% tied to three-year Relative ROE. The grant date fair value is calculated assuming a target payout. In addition, the value of options, if any, realized by the optionee will not be determined until exercise. |
Outstanding Equity Awards at 20152021 Year-End
The following table provides information on the 20152021 year-end holdings of SARs, RSUs, stock options and PCSperformance contingent awards by our named executive officers. This table includes vested and unvested SARs, RSURSUs and option awards and unvested PCS grantsperformance contingent awards with performance conditions that have not yet been satisfied. The vesting schedule for each grant is described in the footnotes following this table, based on the grant date. The market value of the stock awards is based on the closing market price of Company stock as of December 31, 2015,2021, which was $85.55.$109.49. The PCS grantsperformance contingent awards are subject to specified performance objectives over the performance period. For additional information about the option awards and stock awards, see the description of equity incentive compensation in the CD&A.
OUTSTANDING EQUITY AWARDS AT 2021 YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
| Grant Date | Number of Securities of Underlying Unexercised Options (Exercisable)1 | Number of Securities Underlying Unexercised Options (Unexercisable)
| Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options
| Option
Exercise
Price | Option
Expiration
Date | Number of Shares or Units of Stock That Have Not Vested2 | Market Value of Shares or Units or Stock That Have Not Vested2 | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested3 | Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested3 |
| Anna Manning |
| 3/7/2014 | 5,514 | | | $78.48 | 3/7/2024 | | | | |
| 3/6/2015 | 8,340 | | | $90.06 | 3/6/2025 | | | | |
| 12/1/2015 | 153,453 | | | $93.21 | 12/1/2025 | | | | |
| 3/4/2016 | 26,681 | | | $93.53 | 3/4/2026 | | | | |
| 3/3/2017 | 27,919 | | | $129.72 | 3/3/2027 | | | | |
| 3/2/2018 | 28,016 | | | $150.87 | 3/2/2028 | | | | |
| 3/1/2019 | 27,911 | 9,304 | | $145.25 | 3/1/2029 | | | | |
| 3/6/2020 | 47,694 | 47,694 | | $117.85 | 3/6/2030 | | | 36,593 | $4,006,567 |
| 3/11/2021 | 10,288 | 30,866 | | $129.01 | 3/11/2031 | 38,273 | $4,190,511 | 49,415 | $5,410,448 |
| Todd C. Larson |
| 2/21/2013 | 7,799 | | | $58.77 | 2/21/2023 | | | | |
| 3/7/2014 | 3,848 | | | $78.48 | 3/7/2024 | | | | |
| 3/6/2015 | 3,926 | | | $90.06 | 3/6/2025 | | | | |
| 3/4/2016 | 9,669 | | | $93.53 | 3/4/2026 | | | | |
| 3/3/2017 | 5,369 | | | $129.72 | 3/3/2027 | | | | |
| 3/2/2018 | 6,444 | | | $150.87 | 3/2/2028 | | | | |
| 3/1/2019 | 6,140 | 2,047 | | $145.25 | 3/1/2029 | | | | |
| 3/6/2020 | 10,165 | 10,165 | | $117.85 | 3/6/2030 | | | 7,799 | $853,912 |
| 3/11/2021 | 2,192 | 6,579 | | $129.01 | 3/11/2031 | 8,305 | $909,315 | 10,680 | $1,169,353 |
| Leslie Barbi |
| 3/6/2020 | 6,677 | 6,677 | | | $117.85 | 3/6/2030 | | | 5,123 | $560,917 |
| 3/11/2021 | 1,440 | 4,322 | | $129.01 | 3/11/2031 | 3,130 | $342,703 | 4,690 | $513,508 |
| Tony Cheng |
| 3/6/2015 | 3,411 | | | $90.06 | 3/6/2025 | | | | |
| 3/4/2016 | 4,152 | | | $93.53 | 3/4/2026 | | | | |
| 3/3/2017 | 3,280 | | | $129.72 | 3/3/2027 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 3/2/2018 | 3,384 | | | $150.87 | 3/2/2028 | | | | |
| 3/1/2019 | 2,911 | 971 | | | $145.25 | 3/1/2029 | | | | |
| 3/6/2020 | 4,063 | 4,064 | | $117.85 | 3/6/2030 | | | 3,118 | $341,390 |
| 3/11/2021 | 872 | 2,619 | | $129.01 | 3/11/2031 | 3,677 | $402,595 | 4,622 | $506,063 |
| Ronald Herrmann |
| 12/1/2020 | | | | $117.85 | 12/1/2030 | 7,006 | | $767,087 | | |
| 3/11/2021 | 1,288 | 3,865 | | | $129.01 | 3/11/2031 | 1,395 | | $152,739 | 2,790 | $305,477 |
| Alain P. Néemeh |
| 3/7/2014 | 5,514 | | | $78.48 | 3/7/2024 | | | | |
| 3/6/2015 | 8,340 | | | $90.06 | 3/6/2025 | | | | |
| 12/1/2015 | 102,302 | | | $93.21 | 12/1/2025 | | | | |
| 3/4/2016 | 9,669 | | | $93.53 | 3/4/2026 | | | | |
| 3/3/2017 | 6,024 | | | $129.72 | 3/3/2027 | | | | |
| 3/2/2018 | 7,172 | | | $150.87 | 3/2/2028 | | | | |
| 3/1/2019 | 6,345 | 2,115 | | | $145.25 | 3/1/2029 | | | | |
| 3/6/2020 | 10,165 | 10,165 | | $117.85 | 3/6/2030 | | | 7,799 | $853,912 |
| 3/11/2021 | 2,192 | 6,579 | | | $129.01 | 3/11/2031 | 8,576 | | $938,986 | 10,951 | $1,199,025 |
1. SARs vest over four years (25% of Contentswhich vests at the end of each of the four years).
2. These columns reflect the number of RSUs granted in March 2021, which vest fully on December 31, 2023. and the number of one-time special RSUs awarded in March 2021, which fully vest for individuals employed with the Company on December 31, 2022. See discussion of RSU awards and 2021 Special Grants in "Compensation Discussion and Analysis - 2021 Compensation Actions and Results.
3. These columns reflect the number of shares and estimated market value of PCS and PSU grants. Given that the 2020 PCS performance measures are cumulative over the three-year period, the Company estimates with a high degree of confidence that due to the impact of the COVID-19 pandemic, the resulting 2020 and 2021 financial results will eliminate the possibility of any future payments under the PCS awards granted for the 2020-2022 performance period. However, SEC rules require disclosure of the number of shares and estimated market value of PCS grants based on the next higher performance measure (target or maximum) that exceeds the previous fiscal year's performance. Accordingly, the number of shares and estimated market value for the PCS grants made in 2020 are disclosed assuming they are awarded at the target (100%) level. The market or payout value is estimated using the closing price, $109.49, of our common stock on December 31, 2021. The performance period for the 2020-2022 PCS grant is January 1, 2020 through December 31, 2022. Rather than measuring the 2021-2023 PCS grant performance metrics on a cumulative basis over a three-year period as done with previous grants, specific financial performance metrics were established for each of 2021 and 2022. Like previous grants, the awards will be subject to a three-year vesting period, with 2023 serving as an additional time vesting period. The 2021 PSU awards will fully vest for individuals employed with the Company on December 31, 2022. Vesting of the PSU awards is subject to a performance condition which requires the Company to achieve financial results that are within a pre-determined range for at least two of the pre-determined measures during either 2021 or 2022. If the performance condition is not met, there will be no payout under the award. Achieving this performance condition will cause the full value of the award to vest. No additional amounts will be paid if Company performance exceeds the financial goals. The 2021 PCS and 2021 PSU grants are disclosed assuming they are awarded at the target (100%) level. The market or payout value is estimated using the closing price, $109.49, of our common stock on December 31, 2021. See discussion of PSU awards and 2021 Special Grants in "Compensation Discussion and Analysis - 2021 Compensation Actions and Results".
| OUTSTANDING EQUITY AWARDS AT 2015 YEAR-END |
| | | | | | | | | | |
Option Awards1 | Stock Awards |
| Grant Date | Number of Securities of Underlying Unexercised Options (Exercisable)2
| Number of Securities Underlying Unexercised Options (Unexercisable)
| Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options
| Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested2
| Market Value of Shares or Units or Stock That Have Not Vested2
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested3,4 | Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested3,4 |
| A. Greig Woodring |
| 2/20/2007 | 31,058 | | | $59.63 | 2/20/2017 | | | | |
| 2/20/2008 | 32,225 | | | $56.03 | 2/20/2018 | | | | |
| 2/18/2009 | 30,127 | | | $32.20 | 2/18/2019 | | | | |
| 2/19/2010 | 46,392 | | | $47.10 | 2/19/2020 | | | | |
| 2/22/2011 | 34,061 | | | $59.74 | 2/22/2021 | | | | |
| 2/28/2012 | 53,991 | | | $56.65 | 2/28/2022 | | | | |
| 2/21/2013 | 51,177 | 17,060 | | $58.77 | 2/21/2023 | | | | |
| 3/7/2014 | 19,550 | 19,551 | | $78.48 | 3/7/2024 | | | 31,852 | $2,724,939 |
| 3/6/2015 | 10,858 | 32,577 | | $90.06 | 3/6/2025 | | | 30,813 | $2,636,052 |
| Jack B. Lay |
| 2/19/2010 | 13,743 | | | $47.10 | 2/19/2020 | | | | |
| 2/22/2011 | 12,489 | | | $59.74 | 2/22/2021 | | | | |
| 2/28/2012 | 16,197 | | | $56.65 | 2/28/2022 | | | | |
| 2/21/2013 | 12,764 | 4,255 | | $58.77 | 2/21/2023 | | | | |
| 3/7/2014 | 4,237 | 4,237 | | $78.48 | 3/7/2024 | | | 6,903 | $590,552 |
| 3/6/2015 | 2,190 | 6,571 | | $90.06 | 3/6/2025 | | | 6,215 | $531,693 |
| Anna Manning |
| 2/20/2007 | 1,181 | | | $59.63 | 2/20/2017 | | | | |
| 2/20/2008 | 1,705 | | | $56.03 | 2/20/2018 | | | | |
| 2/18/2009 | 7,056 | | | $32.20 | 2/18/2019 | | | | |
| 2/19/2010 | 6,336 | | | $47.10 | 2/19/2020 | | | | |
| 2/22/2011 | 8,326 | | | $59.74 | 2/22/2021 | | | | |
| 2/28/2012 | 10,563 | | | $56.65 | 2/28/2022 | | | | |
| 2/21/2013 | 8,407 | 2,803 | | $58.77 | 2/21/2023 | | | | |
| 3/7/2014 | 2,757 | 2,757 | | $78.48 | 3/7/2024 | | | 4,492 | $384,291 |
| 3/6/2015 | 2,085 | 6,255 | | $90.06 | 3/6/2025 | | | 5,916 | $506,114 |
| 12/1/2015 |
| 153,453 | | $93.21 | 12/1/2025 | | |
|
|
| Alain P. Néemeh |
| 2/19/2010 | 9,205 | | | $47.10 | 2/19/2020 | | | | |
| 2/22/2011 | 8,326 | | | $59.74 | 2/22/2021 | | | | |
| 2/28/2012 | 10,563 | | | $56.65 | 2/28/2022 | | | | |
| 2/21/2013 | 8,569 | 2,857 | | $58.77 | 2/21/2023 | | | | |
| 3/7/2014 | 2,757 | 2,757 | | $78.48 | 3/7/2024 | | | 4,492 | $384,291 |
| 3/6/2015 | 2,085 | 6,255 | | $90.06 | 3/6/2025 | | | 5,916 | $506,114 |
| 12/1/2015 |
| 102,302 | | $93.21 | 12/1/2025 | | |
|
|
| Donna H. Kinnaird |
| 4/2/2012 | 11,198 | | | $59.36 | 4/2/2022 | | | | |
| 2/21/2013 | 9,413 | 3,138 | | $58.77 | 2/21/2023 | | | | |
| 3/7/2014 | 3,111 | 3,112 | | $78.48 | 3/7/2024 | | | 5,069 | $433,653 |
| 3/6/2015 | 2,085 | 6,255 | | $90.06 | 3/6/2025 | | | 5,916 | $506,114 |
| 12/1/2015 |
|
| | $93.21 | 12/1/2025 | 6,437 |
| $550,685 |
|
|
| |
1. | Prior to February 2011, the Company granted stock options as the form of our long-term equity incentive awards. The terms and conditions of the stock option grants are substantially similar to our SARs grants. The option awards also used an exercise price that was set at the closing price on the day of the award (the date of the February Committee meeting) and also expire 10 years after grant date. The vesting schedule for grants of stock options was five years, no portion of which vested in the first year, and 25% of which vested at the end of each of the four remaining years. |
| |
2. | This column reflects the number of RSUs granted to Ms. Kinnaird in December 2015, which vest fully on January 11, 2017. See discussion of PCS awards and 2015 Special Grants in "Compensation Discussion and Analysis - 2015 Compensation Actions and Results - 2015 Special Grants." |
| |
3. | Stock options vest and become exercisable in four equal annual installments of 25%, on December 31 of the second, third, fourth and fifth years. SARs, which were first granted in 2011, generally vest over four years (25% of which vests at the end of each of the first four years). The SARs granted on December 1, 2015 to Ms. Manning and Mr. Néemeh will fully vest on November 30, 2020. |
| |
4. | These columns reflect the number of shares and estimated market value of grants of PCS. Because the relative return on equity measure is dependent upon public availability of financial results from our peer companies, our performance for the relative return on equity metric will not be approved by the Compensation Committee until late April 2016, after the filing of this Proxy Statement. Payments will be made in May 2016. These payments will be fully disclosed in our 2017 Proxy Statement. See "SARs and Option Exercises and Stock Vested in 2015" for more information on the payout of those awards. SEC rules require disclosure of the number of shares and estimated market value of PCS grants based on the next higher performance measure (target or maximum) that exceeds the previous fiscal year’s performance. Accordingly, the number of shares and estimated market value for the PCS grants made in 2014 are disclosed assuming they are awarded at the target (100%) level and the 2015 are disclosed assuming they are awarded at the target (100%) level. The market or payout value is estimated using the closing price, $85.55, of our common stock on December 31, 2015. The performance period for the 2013-2015 PCS grant was January 1, 2013 through December 31, 2015. The performance period for the 2014-2016 PCS grant is January 1, 2014 through December 31, 2016. The performance period for the 2015-2017 PCS grant is January 1, 2015 through December 31, 2017. |
SARs and Option Exercises and Stock Vested in 20152021
20152021 SARs and Option Exercises -. The following table provides information for the named executive officers regarding SARs and stock option exercises during 2015,2021, including the number of shares acquired upon exercise and the value realized.
2021 SARS AND OPTION EXERCISES | 2015 SARS AND OPTION EXERCISES |
| | | | |
Name
| Option and SARs Awards | Stock Awards |
Number of Shares Acquired on Exercise
| Value Realized on Exercise
| Number of Shares Acquired on Vesting1
| Value Realized on Vesting1
|
A. Greig Woodring2 | 37,911 | $1,878,773 | 16,653 | $1,537,405 |
Jack B. Lay2 | 49,439 | $2,314,422 | 4,997 | $461,323 |
| Anna Manning | --- | --- | 3,259 | $300,871 |
| Alain P. Néemeh | --- | --- | 3,259 | $300,871 |
| Donna H. Kinnaird | --- | --- | 3,457 | $319,150 |
| | | | | | | | | | | | | | |
| Option and SARs Awards1 | Stock Awards2 |
| Name | Number of
Shares Acquired
on Exercise | Value Realized
on Exercise | Number of
Shares Acquired
on Vesting | Value Realized
on Vesting |
| Anna Manning | — | — | — | — |
| Todd C. Larson | 7,324 | 455,699 | — | — |
| Leslie Barbi | — | — | — | — |
| Tony Cheng | — | — | — | — |
| Ronald Herrmann | — | — | — | — |
| Alain P. Néemeh | — | — | — | — |
| |
1. | Since the PCS Relative ROE measure is dependent upon public availability of financial results from our peer companies, our performance for the relative return on equity metric will not be approved by the Compensation Committee until late April 2016, after the filing of this Proxy Statement. The settlement of PCS awards for the 2013-2015 performance period will not be made until May 2016, so this information is not currently available. |
| |
2. | Mr. Woodring exercised 37,911 options on August 14, 2015 with an average market value1. Mr. Larson exercised 7,324 options on August 12, 2021 with an average market price for the shares of $97.04. Mr. Lay exercised 49,439 options on May 7, 2015 with an average market value for the shares of $92.42. |
$118.87.
2012-20142. These columns represent amounts paid for the settlement of our PCS awards for the 2018-2020 performance period, paid in 2021.
2018-2020 Performance Contingent Share Payout - Since. In February 2018, the calculation ofCommittee established the target and range for the following PCS Relative ROE measure is dependent upon public availability of financial results fromperformance measures: (i) three-year adjusted operating ROE; (ii) three year adjusted operating income and (iii) three-year book value per share, excluding AOCI. These measures were set for the period beginning in 2018 at levels that were consistent with our peer companies,intermediate-term goals for those measures. The performance period for the payout2018 PCS grant began on January 1 2018 and ended on December 31, 2020.
In February 2021, the Committee reviewed the results for the 2012-2014 PCS grants were not2018-2020 performance period and determined until late April 2015 and payments were not made until May 2015, afterthat none of the 2015 Proxy Statement was published. Therefore, we are disclosing information regarding that PCS payout inmetrics met the following table:threshold level.
| 2012-2014 PERFORMANCE CONTINGENT SHARE PAYOUT |
| | | | |
| | Name | Percentage Payout | Number of Shares Acquired on Payout | Value Realized on Payout |
| |
| | A. Greig Woodring | 82.0% | 16,653 | $1,537,405 |
| | Jack B. Lay | 82.0% | 4,997 | $461,323 |
| | Anna Manning | 82.0% | 3,259 | $300,871 |
| | Alain P. Néemeh | 82.0% | 3,259 | $300,871 |
| | Donna H. Kinnaird | 82.0% | 3,457 | $319,150 |
2013-2015Performance Contingent Share Payout - Since the calculation of the PCS Relative ROE measure is dependent upon public availability of financial results from our peer companies, our performance for the relative return on equity metric for the 2013-2015 PCS grants will not be determined until late April 2016 and payments will not be made until May 2016, after the filing of this Proxy Statement. These payments will be fully disclosed in our 2017 Proxy Statement.
Pension Benefits in 20152021
RETIREMENT PLAN ACCUMULATED BENEFITS
| | | | | | | | | | | | | | |
| Name* | Plan Names | Years of
Service Credited | Present Value of Accumulated Benefit1 | Payments
During Last
Fiscal Year |
| Anna Manning | Performance Pension Plan | 5 | $150,860 | --- |
| Augmented Benefit Plan | 5 | $1,469,187 | --- |
| RGA Canada Defined Benefit Plan SERP | 9 | $2,023,466 | --- |
| Supplemental Payment | 15 | $776,000 | --- |
| Todd C. Larson | Performance Pension Plan | 26 | $490,295 | --- |
| Augmented Benefit Plan | 26 | $1,930,418 | --- |
| Tony Cheng | Performance Pension Plan | 3 | $17,846 | --- |
| Alain P. Néemeh | RGA Canada Defined Benefit Plan SERP | 26 | $8,415,649 | --- |
| *Ms. Barbi and Mr. Herrmann are not eligible for the Performance Pension Plan or the pension element of the Augmented Benefit Plan. |
| RETIREMENT PLAN ACCUMULATED BENEFITS |
| | | | |
| Name | Plan Names | Years of Service Credited | Present Value of Accumulated Benefit1 | Payments During Last Fiscal Year |
| A. Greig Woodring | Performance Pension Plan | 36 | $1,280,372 | --- |
| Augmented Benefit Plan | 36 | $13,411,398 | --- |
Supplemental Plan2 | 36 | $499,535 | --- |
| Jack B. Lay | Performance Pension Plan | 24 | $610,952 | --- |
| Augmented Benefit Plan | 24 | $2,649,849 | --- |
| Anna Manning | Group Pension Plan for Canadian Employees of RGA | 9 | $207,728 | --- |
| RGA International Toronto Supplemental Executive Retirement Plan (SERP) | 9 | $1,807,741 | --- |
| Alain P. Néemeh | Group Pension Plan for Canadian Employees of RGA | 19 | $449,204 | --- |
| RGA Canada Supplemental Executive Retirement Plan (SERP) | 19 | $2,228,583 | --- |
| Donna H. Kinnaird | Performance Pension Plan | 3 | $85,068 | --- |
| Augmented Benefit Plan | 3 | $283,053 | --- |
| |
1. | 1.The accumulated benefit for the U.S. plans is based on service and compensation (as described above) considered by the plans for the period through December 31, 2015. The present value has been calculated assuming the earliest retirement age at which the participant can elect an unreduced benefit. For additional discussion of the assumptions, see note 10 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2015, as filed with the SEC. As described in such note, the interest assumptions for the qualified pension plan, the augmented benefit plan and the supplemental plan are 4.13%, 3.73% and 3.83%, respectively. |
The accumulated benefit for the Canadian registered pension plan is based on service and compensation (base salary and bonus paid)(as described above) considered by the plans for the period through December 31, 2015.2021. The present value has been calculated assuming the earliest retirement age at which the participant can elect an unreduced benefit. For additional discussion of the assumptions, see note 10 of the Company's financial statements in the Form 10-K for the year ended December 31, 2021, as filed with the SEC. As described in such note, the interest assumptions for the qualified pension plan and the augmented benefit plan are 2.68% and 2.36%, respectively.
For Mr. Cheng, the Performance Pension Plan represents his accrued benefit in the U.S. pension plan prior to his transfer outside of the country in 2002. Mr. Cheng does not accrue additional benefits in the plan, but his Performance Pension Account continues to increase with interest each year.
The accumulated benefit for the Supplemental Payment to Ms. Manning is calculated based on the maximum registered contributions allowedactual retirement benefits accumulated by Ms. Manning to date, as well as a projection of her employer-provided retirement benefits had she been employed in the U.S. since her original hire date with the Company. The calculation of the accumulated value of the benefit is based on her actual earnings up through December 31, 2021, currency exchange rates effective for each year to convert her Canadian earnings to U.S. dollars, and the net rateassumed annual return on her defined contribution benefits of return reflects the performance of market-related funds4% before 2016, 4.5% for the period described, taking into account applicable investment management fees.Executive Deferred Savings Plan in 2016 and later, and 6% in the Augmented Savings and Savings Plan benefits in 2016 and later.
For Canadian executives participating in the RGA Canada Defined Benefit Plan SERP, the accumulated benefit is based on credited service and pensionable earnings up to December 31, 2015. Interest rates: 2.1%2021 (except for Ms. Manning for which earnings are credited up until her date of transfer to the U.S. in 2016). The present value of the accumulated benefit is calculated using an interest rate of 2.3% for the first 10 years and 3.7%3.4% thereafter. Mortality
Performance Pension Account Benefits
The Performance Pension Account Benefit payable to eligible employees, including certain executives, upon termination of employment is the sum of (1) and (2) as follows:
(1) Participants earn base credits for each Year of Accrual Service (as defined below) completed under the plan. The credit is a percentage of the employee's Final Average Annual Compensation (as defined below) based on the participant's age on January 1 of the Pension Plan year.
(2) Additional excess compensation credits are earned on Final Average Annual Compensation that is greater than 60% of the prevailing Social Security Wage Base (as defined below), rounded to the next $100.
See table used: CPM2014 Fully Generationalbelow for detail on base and excess compensation credits.
| | | | | | | | |
Age on January 1 of the
Plan Year in which
the Year of Accrual Service is Earned | Base Credits - Percentage of Final
Average Annual Compensation Credited | Excess Compensation Credits - Percentage of Final Average Annual Compensation Credited |
| Up to 35 | 2% | 1% |
| 35 – 44 | 4% | 2% |
| 45 – 54 | 6% | 3% |
| 55 or over | 8% | 4% |
For certain Company employees who were employees prior to January 1, 1996, the Pension Plan provides a "Traditional Benefit" paid exclusively in the form of an annuity. None of our named executive officers have accrued a Traditional Benefit annuity in the Pension Plan.
The Pension Plan's Traditional Benefit required employees to reach age 55 with Improvement Scale CPM-B.10 years of service to be eligible for early retirement. Pension Plan participants with a Performance Pension Account Benefit may elect to receive their Performance Pension Account Benefit as a lump sum or an annuity at any time after termination of employment, subject to the three-year vesting requirement of the plan.
| | | | | |
2.PERFORMANCE PENSION ACCOUNT DEFINITIONS |
| Until January 1, 1994, we also maintainedDefinition |
| Final Average Annual Compensation | The average of compensation received (base salary and ABP award) during the 5 consecutive years of accrual service within the last 10 calendar year period immediately preceding termination of employment which produces the highest average amount (or during all the years of accrual service if less than 5). |
| Year of Accrual Service | A year is credited for each plan year after an Executive Supplemental Retirement Plan (the "Supplemental Plan"),employee becomes a nonqualified defined benefit plan pursuant toparticipant in which eligible executive officers are entitled to receive additional retirement benefits. Benefits under the Supplemental Plan were frozen asparticipant is credited with at least 1,000 hours of January 1, 1994. The frozen annual benefit payable upon retirement at age 65 is $3,060 for Mr. Woodring. Retirement benefits under the Supplemental Plan are payable at age 65 in the form of a 15-year certain life annuity, with no direct or indirect integration with service. |
Social Security benefits.Wage Base | For any year the maximum amount of compensation which may be considered wages for such year for purposes of assessing Federal Insurance Contributions Act (FICA) taxes. |
Nonqualified Deferred Compensation in 20152021
2021 NONQUALIFIED DEFERRED COMPENSATION
| | | | | | | | | | | | | | | | | |
Name
| Executive Contributions in Last FY1 | Registrant Contributions in Last FY2 | Aggregate Earnings in Last FY3 | Aggregate
Withdrawals/
Distributions | Aggregate Balance at Last FYE4 |
| Anna Manning | $121,025 | $202,297 | $48,877 | $— | $1,180,176 |
| Todd C. Larson | $61,275 | $82,904 | $99,936 | $— | $1,162,473 |
| Leslie Barbi | $90,467 | $25,587 | $4,456 | $— | $120,509 |
| Ronald Herrmann | $30,000 | $— | $993 | $— | $30,993 |
1. The amounts in this column are also included in the Summary Compensation Table in the "Salary" column (i.e., contributions to the Executive Deferred Savings Plan).
2. The amounts in this column reflect 2020 contributions credited to the participant's account during 2021. For reasons related to the timing of the contributions, the amounts will not match the amounts in the Summary Compensation Table's "All Other Compensation" column, which are contributions for 2021 which are actually made in 2022.
3. Reflects earnings credited to the participant's account during 2021 in connection with the investment selections chosen from time to time by the participant.
| 2015 NONQUALIFIED DEFERRED COMPENSATION |
| | | | | |
Name
| Executive Contributions in Last FY1 | Registrant Contributions in Last FY2 | Aggregate Earnings in Last FY3 | Aggregate Withdrawals/ Distributions4 | Aggregate Balance at Last FYE5 |
| A. Greig Woodring | --- | $35,513 | $2,619 | --- | $1,152,779 |
| Jack B. Lay | $74,277 | $35,515 | $50,024 | (20,792) | $1,675,907 |
| Anna Manning | N/A | N/A | N/A | N/A | N/A |
| Alain P. Néemeh | N/A | N/A | N/A | N/A | N/A |
| Donna H. Kinnaird | --- | $27,613 | $4,261 | --- | $94,977 |
| |
1. | The amounts in this column are also included in the Summary Compensation Table in the salary column (i.e., contributions to the EDSP). |
| |
2. | The amounts in this column reflect 2014 contributions credited to the participant’s account during 2015. For reasons related to the timing of the contributions, the amounts will not match the amounts in the Summary Compensation Table’s "All Other Compensation" column, which are contributions for 2015 credited in 2016. All amounts represent contributions in the Augmented Plan except for Mr. Lay – $25,368 and Ms. Kinnaird – $19,723, which was a contribution to the EDSP.
|
| |
3. | Reflects earnings credited to the participant’s account during 2015 in connection with the investment selections chosen from time to time by the participant. Mr. Woodring’s amounts represents earnings exclusively in the Augmented Plan. Amounts for Mr. Lay and Ms. Kinnaird represent earnings in the Augmented and EDSP plans. |
| |
4. | The amount in this column represents a distribution to Mr. Lay from his EDSP account in compliance with IRS regulations that govern non-qualified plans. |
| |
5. | The aggregate balance at last fiscal year-end column reflects the following amounts that were reported in the Summary Compensation Table in previous years: Mr. Woodring – $1,114,647; Mr. Lay – $1,536,883, Ms. Kinnaird – $63,104.
|
4. The aggregate balance at last fiscal year-end column reflects the following amounts that were reported in the Summary Compensation Table in 2020 for Ms. Manning in the amount of $807,977, and Mr. Larson in the amount of $918,359.
OTHER EXECUTIVE COMPENSATION MATTERS
Additional Compensation Disclosures
Generally No Employment or Severance Agreements. We do not have employment, severance or change-in-controlchange of control agreements with any of our U.S. or Canadian named executive officers. The Company has an employment agreement with Mr. Cheng, which is standard practice for international employees at his seniority in Hong Kong, but it does not entitle him to any severance or particular benefits upon termination or a change of control.
Perquisites. We do not provide personal-benefit perquisites to our U.S. and Canadian named executive officers or their families, such as airplanes, cars or apartments, and we do not reimburse these executive officers or any of oursuch employees for personal-benefit perquisites such as club dues or other social memberships. In some countries outside North America, it is our practice to provide remuneration and benefit packages that are competitive against the local or regional market to senior leaders, such as housing, club and car allowances. Executive officers and other employees may seek reimbursement for business-related expenses in accordance with our business expense reimbursement policy. Mr. Cheng received local market-competitive allowances for education and housing.
Compensation Recovery. Under the Sarbanes-Oxley Act, in the event ofupon misconduct that results in a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments from our Chief Executive Officer and Chief Financial Officer.
Additionally, our Executive Incentive Recoupment Policy permits the Company to recoup all or a portion of incentive awards paid to certain executives upon the occurrence of certain recoupment events. Such events include: (i) a financial restatement due to the material noncompliance with any financial reporting requirement under the federal securities laws; (ii) receiving an incentive award based on materially inaccurate financial statements or any other materially inaccurate performance; (iii) causing injury to the interests or business reputation of the Company or of a business unitunit; and (iv) a material violation of the Company’s PrinciplesCompany's Code of Ethical Business Conduct. The Company can recoup incentive awards for up to four years following the payment of an award. The policy applies to an identified group of current orand former officers and employees of the Company, as determined by the Board or the Compensation Committee from time to time based on position, responsibility, level, title, business unit and/or compensation. The Compensation Committee has express authority to interpret and administer the policy and to make all determinations with respect to the policy in its sole discretion.
Deductibility of Compensation. The goalCommittee believes that a significant portion of our executive officers’ compensation should be tied to measures of performance of our business. While the Compensation Committee isconsiders the tax deductibility of awards as one factor in determining executive compensation, it also looks at other factors in making its decisions and retains the flexibility to complyaward compensation that it determines to be consistent with the requirementsgoals of Internal Revenue Code Section 162(m), toour executive compensation program even if the extent deemed practicable, with respect to annual and long-term incentive programs to avoid losing the deductionawards are not deductible for non-performance based compensation in excess of $1,000,000 paid to our Chief Executive Officer and the three other most highly-compensated employees (other than the Chief Executive Officer and Chief Financial Officer), subject to any restrictions under the Code or any guidance issued by the Internal Revenue Service applicable to the tax year at issue. We generally structure our performance-based compensation plans with the objective that amounts paid under those plans and arrangements are tax deductible, including having the possible performance goals approved by the shareholders. purposes.
Termination or Change of Control Payments
As described above, the named executive officers generally do not have employment, severance or change of control agreements with the Company. The information below describes and quantifies certain compensation that may or will become payable under existing plans and agreements if the named executive officer’sofficer's employment had terminated on or by December 31, 2015,2021, due to a change of
control, disability or death, given the executive’sexecutive's compensation and service levels as of such date and, wherewhen applicable, based on the Company's closing stock price on December 31, 20152021 or actual date of disability, death, etc. These benefits are in addition to benefits available generally to salaried employees such as distributions under the 401(k) and pension plans, retiree medical benefits, disability benefits and accrued vacation pay.
Change of Control. Upon the occurrence ofIn connection with a change of control (as defined below), the Compensation Committee has the authority to fully vest any unvested stock options or SARs granted before the change of control if the Committee determines such vesting is necessary to protect the rights of the named executive officers and other executives following such change of control. Our Flexible Stock Plan and stock option grantaward agreements provide that the Compensation Committee may (i) accelerate the vesting periods, or(ii) arrange for usthe Company to purchase the options so the named executive officer receives the value that he or she would have attained had the option been currently exercisable.exercisable, (iii) make such adjustments to the options then outstanding as the Committee deems appropriate to reflect such change of control or (iv) cause the options then outstanding to be assumed, or new options substituted therefore, by the surviving corporation in such change. Our SARs agreements allow awards to automatically accelerate upon a change of control, subject in all cases to the Committee's authority to, among other actions, adjust such awards or cause them to be assumed by the surviving corporation in such change (as described above). In addition, our Flexible Stock Plan and PCS grant agreements provide that upon a change of control, as soon as practicable following the end of the applicable three-year performance period, we must deliver to the named executive officer the number of shares that coincides with the target award for each outstanding grant of PCS.
Disability or Death. If one of the named executive officers were to become disabled or die, the vesting of any unvested stock options and SARs granted before the date of such event would immediately vest and become exercisable.may be accelerated in the Committee's sole discretion. In addition, he or she would receive a pro rata proportion of the shares of common stock that would have been issued under any award of PCS at the end of the three-year performance period. The pro rata proportion is determined based on the number of calendar months in the performance period during which he or she was employed, divided by 36 months (the total number of months in the three-year performance period); however,. To the PCS award grantedextent that the transfer of one of the named executive officers' stock options and SARS is permitted at death by the Flexible Stock Plan or under another agreement, (i) the named executive officer's stock options and SARs shall be transferable to Mr. Woodring in 2016 vests over 12 months, so the denominator inbeneficiary, if any, designated on forms prescribed by and filed with the Committee and (ii) upon the death of the named executive officer, such calculation wouldbeneficiary shall succeed to the rights of the deceased to the extent permitted by law and the Flexible Stock Plan. If no such designation of a beneficiary has been made, the named executive officer's legal representative shall succeed to the options and SARs, which shall be 12.transferable by will or pursuant to laws of descent and distribution to the extent permitted by the Flexible Stock Plan or under another agreement.
Retirement. UponFor grants awarded in 2018 and earlier, upon the "retirement"retirement (as defined below) of a named executive officer, unvested stock options and SARs do not accelerate but continue to vestmay be accelerated in the Committee's sole discretion and in accordance with the vesting schedule and provisions specified in the respective option grant agreement(s). For grants awarded in 2019 and later, upon the retirement of a named executive officer, unvested stock options and SARs will vest 100% in accordance with the vesting schedule and provision specified in the respective grant agreement(s). Upon retirement, the pro rata distribution provisions described above under "Disability or Death" apply to any PCS grants. Due to the number of factors that affect the nature, amount and timing of the vesting and exercise of stock options or SARs, or the actual award following a PCS performance period, the amounts paid to or received by the named executive officer may differ and are undeterminableindeterminable until actually realized.
The named executive officers may participate in deferred compensation plans that permit deferral of certain compensation. They may also participate in our defined contribution and defined benefit retirement plans. The last column of the table under "Nonqualified Deferred Compensation in Fiscal 2015"2021" reports each named executive’sexecutive's aggregate balance at as of December 31, 2015,2021, under each nonqualified deferred compensation or defined contribution plan. The named executive officers are
entitled to receive the amount in their deferred compensation account in the event ofupon termination of employment or retirement.reaching a certain date selected by the executive at the time when they elect to defer compensation. The table under "Pension Benefits in Fiscal 2015"2021" describes the general terms of each pension plan in which the named executive officers participate, the years of credited service and the present value of each named executive officer’sofficer's accumulated pension benefit.
Definitions. "Change of Control" is defined in our Flexible Stock Plan and, for this discussion, means (i) the acquisition, without Board approval, of more than 20% of ourthe Company's outstanding common shares through a tender offer, exchange offer or otherwise, (ii) ourthe Company's liquidation or dissolution following a sale or other disposition of all or substantially all of our assets, (iii) a merger or consolidation involving usthe Company which results in usthe Company not being the surviving corporation or (iv) a change in the majority of the members of ourthe Board of Directors during any two-year period not approved by at least two-thirds of the directors who were members at the beginning of the two-year period.
"Retirement" is defined in the respective equity incentive grant agreements and means termination of employment status after the participant has attained a combination of age and years of service that equals at least 65; provided that the maximum number of years of service credited for purposes of this calculation shall be ten. Thus, the named executive officers who have attained age 55 and have 10 years of service satisfy the definition and are eligible for the benefits described above associated with retirement. Atretirement as of December 31, 2015, the named executive officers who satisfied this requirement were Messrs. Woodring2021, include Ms. Manning and Lay.
The following table provides the value of equity awards that wouldcould accelerate and become exercisable or vested upon the occurrence of a change of control or if the named executive officer had become disabled or died as of December 31, 2015.2021. The value calculations are based upon our stock price as of December 31, 20152021 ($85.55), the last business day of the year,109.49) and in the case of options reflect the payment of the respective option exercise price.
VALUE OF EQUITY AWARDS UPON CERTAIN EVENTS
| | | | | | | | | | | | | | |
Name
| Change of Control* | Disability or Death |
Options/SARs
| PCS/PSU/RSU
(full award at target) | Options/SARs
| PCS/PSU/RSU
(pro rata) |
| Anna Manning | $0 | $16,151,636 | $0 | $11,709,447 |
| Todd C. Larson | $0 | $3,492,293 | $0 | $2,537,412 |
| Leslie Barbi | $0 | $1,417,129 | $0 | $917,199 |
| Tony Cheng | $0 | $1,515,451 | $0 | $1,114,582 |
| Ronald Herrmann | $0 | $1,225,303 | $0 | $1,020,633 |
| Alain P. Néemeh | $0 | $3,570,250 | $0 | $2,600,533 |
| *Payment upon a change of control is subject, in all cases, to the Committee's authority to, among other actions, adjust such awards or cause them to be assumed by the surviving corporation in such change (as described above). |
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K (the "pay ratio rules"), we are providing information about the relationship of the annual total compensation of our employees and the annual total compensation of Ms. Anna Manning, our President and Chief Executive Officer (our "CEO"). This regulation requires the Company to identify our median employee by using consistently applied compensation measures and then determine the ratio of our CEO's total annual compensation to the compensation of this employee. The pay ratio information included in this disclosure is a reasonable estimate calculated in a manner consistent with the pay ratio rules.
| VALUE OF EQUITY AWARDS UPON CHANGE OF CONTROL |
| | | | |
Name
| Change of Control | Disability or Death |
Options/SARs
| PCS/RSU (full award at target) | Options/SARs
| PCS/RSU (pro rata) |
| A. Greig Woodring | $595,092 | $5,360,991 | $595,092 | $2,695,313 |
| Jack B. Lay | $143,904 | $1,122,245 | $143,904 | $570,934 |
| Anna Manning | $94,556 | $890,404 | $94,556 | $424,894 |
| Alain P. Néemeh | $96,002 | $890,404 | $96,002 | $424,894 |
| Donna H. Kinnaird | $106,037 | $939,7671 | $106,037 | $1,008,4901 |
| |
1. | Includes the number of Restricted Share Units granted to Ms. Kinnaird on December 1, 2015, which vest fully on January 11, 2017. See discussion of PCS awards and 2015 Special Grants in "Compensation Discussion and Analysis - 2015 Compensation Actions and Results - 2015 Special Grants." |
The pay ratio rules permit the use of a determined median employee for up to three years, unless there has been a meaningful change to the Company's employee population, or a change in employee compensation arrangements such that the Company believes would result in a significant modification to the pay ratio disclosure.
While there was no significant change in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure, we decided to recalculate the median employee due to the divestiture of a small subsidiary. This median employee was selected from those individuals whose compensation is determined by the Company, which includes all of our regular employees, temporary fixed-term employees, temporary student employees, interns and co-op employees who were working for the Company on October 31, 2021. As of October 31, 2021, there were 3,649 individuals working for the parent company and consolidated subsidiaries worldwide.
We used base salary and ABP payments to calculate our median employee, as these compensation measures apply consistently to all employees, across all locations of our employee population. The base salary of any permanent full-time employee who did not work the full year was annualized. We did not make any cost-of-living adjustments for non-U.S. employees in determining each employees' annual compensation. For foreign employees, a year-to-date average exchange rate was used for base salary and the spot rate for March 1, 2021 was used for the ABP payment.
We combined all of the elements of the median employee's compensation for 2021, in accordance with the requirements of the pay ratio rules, resulting in annual total compensation of $125,152. The annual total compensation of our CEO inclusive of the special one-time equity award granted in 2021, as reported in the Summary Compensation Table included in this Proxy Statement, was $16,109,515 in 2021. Based on this information, for 2021 the ratio of the annual total compensation of our CEO as compared to our median employee was 129:1.
ITEM 2 – SHAREHOLDERS’SHAREHOLDERS' ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act enables our shareholders to vote to approve, on an advisory basis (i.e., non-binding), the compensation of the named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K (including in the Compensation Discussion and Analysis section, compensation tables and accompanying narrative disclosures).
The Company has a "pay-for-performance" philosophy that forms the foundation of all decisions regarding compensation of the named executive officers. This compensation philosophy, and the program structure approved by the Compensation Committee, is central to our ability to attract, retain and motivate individuals who can achieve superior financial results. Please refer to "Compensation Discussion and Analysis – Overview" of Compensation Practices" for an overview of the compensation of the named executive officers. A primary focus of the Compensation Committee is whether the Company’sCompany's executive compensation program serves the best interests of the Company’sCompany's shareholders. At the Company’s 2015Company's 2021 Annual Meeting, a significant majority (98.3%(95% of votes cast on the proposal) of our shareholders approved the compensation program described in the proxy statement for that meeting. This is consistent with our shareholder feedback at our previous annual meetings:
|
| |
| Annual Meeting Year | Percentage of Votes Cast in Favor of "Say on Pay" |
| 2015 | 98% |
| 2014 | 97% |
| 2013 | 99% |
| 2012 | 96% |
| 2011 | 92% |
| | | | | |
| Annual Meeting Year | Percentage of Votes Cast in Favor of "Say on Pay" |
| 2021 | 95% |
| 2020 | 98% |
| 2019 | 98% |
| 2018 | 98% |
| 2017 | 98% |
| Five Year Average | 97.4% |
As part of its ongoing review of our executive compensation program, the Compensation Committee took the votes into consideration, along with an overall review of the compensation program, when making compensation decisions for 20152021 and 2016.2022. The Compensation Committee determined that the Company’sCompany's executive compensation philosophy, objectives and elements continue to be appropriate.
We are asking our shareholders to approve the compensation of the named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the "Compensation
Discussion and Analysis" and "Compensation Tables and Other Matters" discussions. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers and the policies and practices described in this Proxy Statement. This vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board of Directors. However, the Board and the Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will carefully consider those shareholders’shareholders' concerns when making future compensation decisions for the named executive officers and will evaluate whether any actions are necessary to address those concerns.
Vote Required
If a quorum is present, the vote required to approve this Item 2 is a majority of the common stock represented in person or by proxy at the Annual Meeting.
Recommendation of the Board of Directors
The Board of Directors recommends that shareholders vote FOR the proposal to approve the compensation of the named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.
AUDIT MATTERS
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed our 20152021 audited financial statements with Company executives. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed as required by auditing standards of the Public Company Accounting Oversight Board ("PCAOB"), SEC Rule 2-07 of Regulation S-X, Statement of Auditing Standards ("SAS") No. 114, "The Auditor’sAuditor's Communication With Those Charged With Governance." The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the PCAOB Rule 3526, and has
discussed with those accountants their independence. Based on those reviews and discussions, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2021, for filing with the SEC. This report is provided by the following independent directors, who comprise the Audit Committee:
William J. Bartlett, Chairman
Arnoud W.A. BootPatricia L. Guinn, Chair
John F. DanahyJ. Gauthier
Christine R. DetrickStephen O'Hearn
Stanley B. Tulin
Steven C. Van Wyk
ITEM 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The thirdfinal item to be acted upon at the Annual Meeting is the ratification of the appointment of Deloitte & Touche LLP the member firms of Deloitte Touche Tohmatsu, and their respective affiliatesrelated entities (collectively, "Deloitte") as the Company’sCompany's independent auditor for the fiscal year ending December 31, 2016.2022. The Audit Committee has appointed Deloitte subject to shareholder ratification. Deloitte has served as independent auditor of the Company since 2000. Its long-term knowledge of the Company and its
subsidiaries, combined with its insurance industry expertise, has enabled it to carry out its audits of the Company’sCompany's financial statements with effectiveness and efficiency.
In considering Deloitte’sDeloitte's appointment, the Audit Committee reviewed the firm’sfirm's qualifications and competencies, including the following factors:
Deloitte’s•Deloitte's status as a registered public accounting firm with the PCAOB, as required by Sarbanes-Oxley and the Rules of the PCAOB;
Deloitte’s•Deloitte's independence and its processes for maintaining its independence;
•the results of the independent review of the firm’sfirm's quality control system;
•the key members of the engagement team for the audit of the Company’sCompany's financial statements;
Deloitte’s•Deloitte's approach to resolving significant accounting and auditing matters including consultation with the firm’sfirm's national office; and
Deloitte’s•Deloitte's reputation for integrity and competence in the fields of accounting and auditing.
The Audit Committee assures the regular rotation of the audit engagement team partners as required by law. The Audit Committee approves Deloitte’sDeloitte's audit and non-audit services in advance as required under Sarbanes-Oxley and SEC rules. Under procedures adopted by the Audit Committee, the Audit Committee reviews, on an annual basis, a schedule of particular audit services that the Company expects to be performed and an estimated amount of fees for each particular audit service. The Audit Committee also reviews a schedule of audit-related, tax and other permitted non-audit services that the Company may engage the independent auditor to perform and an estimated amount of fees for each of those services.
All audit related services, tax services and other services were pre-approved by the Audit Committee, which concluded that the provision of such services by Deloitte was compatible with the maintenance of that firm’sfirm's independence in the conduct of its auditing functions. The Audit Committee has adopted a Pre-Approval Policy which provides for pre-approval of audit, audit-related and tax services on an annual basis and, in addition, individual engagements anticipated to exceed pre-established thresholds must be separately approved. The policy authorizes the Committee to delegate to one or more of its members pre-approval authority with respect to permitted services.
Representatives of Deloitte will attend the 20162022 Annual Meeting. They will have an opportunity to make a statement if they desire to do so and they will be available to respond to appropriate questions.
The aggregate fees billed to us for the years ending December 31, 20152021 and 20142020 by Deloitte are set forth below. These fees have been approved by the Company’sCompany's Audit Committee in accordance with its Pre-Approval Policy.
AUDITOR FEES
| | | | | | | | |
| Fee | Fiscal Year |
| 2021 | 2020 |
Audit Fees1 | $11,610,406 | $11,105,907 |
Audit Related Fees2 | 566,315 | 795,074 |
| Total audit and audit-related fees | $12,176,721 | $11,900,981 |
Tax Fees3 | 83,094 | 383,606 |
| Other | — | — |
| Total Fees | $12,259,815 | $12,284,587 |
1. Includes fees for the audit of our Company's and its subsidiaries' annual financial statements, reviews of our quarterly financial statements and Sarbanes-Oxley Section 404 attestation.
2. Includes fees for services rendered by Deloitte for matters such as assistance with internal control reporting requirements, certain accounting consultations on potential acquisition, reinsurance transactions, new accounting standards and International Financial Reporting Standards, and services associated with SEC registration statements, periodic reports and securities offerings. | AUDITOR FEES |
| | | |
| Fee | Fiscal Year |
| 2015 | 2014 |
Audit Fees1 | $7,850,488 | $7,424,899 |
Audit Related Fees2 | 430,000 |
| 430,527 |
| Total audit and audit-related fees | 8,280,488 |
| 7,855,426 |
Tax Fees3 | 55,848 |
| 210,827 |
Other4 | — |
| 166,850 |
| Total Fees | $8,336,336 | $8,233,103 |
3. Includes fees for tax services rendered by Deloitte such as consultation related to tax planning and compliance.
52
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1. | Includes fees for the audit of our Company’s and its subsidiaries’ annual financial statements, reviews of our quarterly financial statements and Sarbanes-Oxley Section 404 attestation. |
| |
2. | Includes fees for services rendered by Deloitte for matters such as assistance with internal control reporting requirements, certain accounting consultations on potential acquisition and reinsurance transactions and services associated with SEC registration statements, periodic reports and securities offerings. |
| |
3. | Includes fees for tax services rendered by Deloitte such as consultation related to tax planning and compliance. |
| |
4. | Includes fees for other types of permitted services rendered by Deloitte for matters such as non-attest related assessments in 2014. |
Vote Required
If a quorum is present, the vote required to approve this Item 3 is a majority of the common stock represented in person or by proxy at the Annual Meeting.
Recommendation of the Board of Directors
The Board of Directors has approved the proposal regarding the appointment of Deloitte and recommends that shareholders vote FOR the proposal.
STOCK OWNERSHIP
SECURITIES
BENEFICIAL OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERSTABLE
The following table sets forth, as of December 31, 2015,2021, certain information with respect to: (1) each person known by us to be the beneficial owner of 5% or more of our outstanding common stock and (2) the ownership of common stock by (i) each of our directors and nominees, (ii) each of our named executive officers and (iii) all directors, nominees and executive officers as a group.
BENEFICIAL OWNERSHIP AS OF DECEMBER 31, 2021
BENEFICIAL OWNERSHIP AS OF DECEMBER 31, 2015 |
| | | | | | | |
| Beneficial Owner | Amount and Nature of Beneficial Ownership1 | Percent of Class2 |
| Significant Shareholders | | |
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | 6,966,9613 | 10.3% |
| Blackrock, Inc.
55 East 52nd Street
New York, NY 10055
| 4,863,6676,383,74334
| 7.46%9.4% |
FMR LLC
245 Summer Street
Boston, MA 02210
| 4,648,3116,077,14145
| 7.13%9.0% |
Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
Harris Associates L.P.
11 South Wacker Drive, Suite 4600
Chicago, IL 60606 | 4,606,9024,430,05856
| 7.07%6.6% |
American Century Investment Management, Inc.
4500 Main Street
Kansas City, MO 64111 | 3,731,8727 | 5.5% |
| Directors, Nominees and Named Executive Officers: | | |
| Non-Employee Directors | | |
William J. BartlettPina Albo | 16,362 | * |
Arnoud W.A. Boot | 6,962 | * |
John F. Danahy | 13,8626
— | * |
| Christine R. Detrick | 3,2875,918 | * |
| J. Cliff Eason | 15,82516,043 | * |
Alan C. HendersonJohn J. Gauthier | 24,8587
6,407 | * |
Joyce A. PhillipsPatricia L. Guinn | 3,2876,840 | * |
| Hazel M. McNeilage | 527 | * |
| Ng Keng Hooi | — | * |
| George Nichols III | — | * |
| Stephen O'Hearn | — | * |
| Frederick J. Sievert | 16,6627,912 | * |
| Stanley B. Tulin | 6,73711,222 | * |
| Steven C. Van Wyk | 989 | * |
| Named Executive Officers | | |
A. Greig Woodring | 481,7758
| * |
Jack B. Lay | 101,1569
| * |
| Anna Manning | 56,491390,8248
| * |
| Todd C. Larson | 92,4739 | * |
| Leslie Barbi | 8,11710 | * |
| Tony Cheng | 36,74711 | * |
| Ronald Herrmann | 1,28812 | * |
| Alain P. Néemeh | 72,384197,61411
| * |
Donna H. Kinnaird | 27,8331213
| * |
All directors and executive officers as a group (17(28 persons) | 959,7381,038,3441314
| 1.47%1.55% |
*Less than 1%.
| |
1. | 1.For purposes of this table, "beneficial ownership" is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have "beneficial ownership" of any shares of common stock that such person has the right to acquire within 60 days. For computing the percentage of the class of securities held by each person or group of persons named above, any shares which such person or persons has the right to acquire within 60 days (as well as the shares of common stock underlying fully vested stock options or SARs) are deemed to be outstanding for the purposes of computing the percentage ownership of such person or group but are not deemed to be outstanding for the purposes of computing the percentage ownership of any shares of common stock that such person has the right to acquire within 60 days. For computing the percentage of the class of securities held by each person or group of persons named above, any shares which such person or persons has the right to acquire within 60 days (as well as the shares of common stock underlying fully vested stock options or SARs) are deemed to be outstanding for the purposes of computing the percentage ownership of such person or group but are not deemed to be outstanding for the purposes of computing the percentage ownership of any |
other person or group. No director, nominee or named executive officer owns more than 1% of our outstanding common stock.
2. Unless otherwise indicated, each named person has sole voting and investment power over the shares listed as beneficially owned and none of the shares listed are pledged as security.
3. As reported on Schedule 13G/A filed February 10, 2022, The Vanguard Group, Inc. and its affiliates have shared voting power over 37,744 shares, shared dispositive power over 94,992 shares, and sole dispositive power over 6,871,969 shares.
4. As reported on Schedule 13G/A filed January 31, 2022, Blackrock, Inc. and funds and accounts managed by Blackrock, Inc. and its subsidiaries have sole voting power over 935,601 shares and sole dispositive power over 6,383,743 shares.
5. As reported on Schedule 13G/A filed February 9, 2022, FMR LLC and its affiliates have sole voting power over 535,553 shares and sole dispositive power over 6,077,141 shares.
6. As reported on Schedule 13G/A filed on February 11, 2022, Harris Associates L.P. and its affiliates have sole voting power over 4,426,080 shares and shared dispositive power over 4,430,058 shares.
7. As reported on Schedule 13G filed on February 4, 2022, American Century Investment Management, Inc. and its affiliates have sole voting power over 3,469,567 shares and sole dispositive power over 3,731,872 shares.
8. Includes for Ms. Manning 335,816 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days.
9. Includes for Mr. Larson 55,552 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. Mr. Larson shares voting and investment power for 4,928 shares with his spouse.
10. Includes for Ms. Barbi, 8,117 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days.
11. Includes for Mr. Cheng 22,073 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days.
12. Includes for Mr. Herrmann 1,288 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days.
13. Includes for Mr. Néemeh 157,723 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days.
14. Includes 723,464 shares of common stock subject to stock options, restricted share units and/or SARs that are exercisable within 60 days.
OTHER SECURITIES OWNERSHIP INFORMATION
Director Stock Retention Policy
Our director stock retention policy provides that, subject to certain exceptions for tax obligations and estate planning purposes, a non-employee member of the Board of Directors may not transfer any shares of the Company's common stock which he or she received as compensation for service on the Board of Directors until the value of the total shares held by the director equals or exceeds five times the amount of the annual cash retainer paid to such director.
Directors' Phantom Shares
Non-employee directors may elect to receive phantom shares by deferring all or a portion of their annual compensation (including the stock portion). A phantom share is a hypothetical share of our common stock based upon the fair market value of the common stock at the time of the grant. Phantom shares granted prior to January 1, 2016 are not distributed until the director ceases to serve on the Board, at which time the Company will issue cash or shares of common stock in an amount equal to the value of the phantom shares. Effective January 1, 2016, directors may elect to receive distributions of deferred shares after five or seven years or at retirement pursuant to a post-deferral election. Distributions can be either via shares or cash and may be paid as a single payment or in five substantially similar annual installments.
Effective May 19, 2021, Directors with phantom shares will earn dividend equivalents on each performance unit credited to and accumulated under their account. “Dividend Equivalents” means a dollar amount equal to the cash dividend that such director would have been entitled to receive if the director had been the owner, on the record date for a dividend paid on the Company's common stock, of a number of shares of common stock equal to the number of performance units then properly credited to and accumulated under the director's phantom share account. All outstanding grants of phantom shares made prior to May 19, 2021 are deemed to include the right to receive Dividend Equivalents.
Since phantom shares can be distributed in cash instead of stock, they are not included as shares beneficially owned by the directors under the Beneficial Ownership Table (page 73). Several directors have elected to participate in the deferral option and the following table illustrates their accumulated phantom share balance as of December 31, 2021: PHANTOM SHARE OWNERSHIP
| | | | | |
2.Name | Unless otherwise indicated, each named person has sole voting and investment power over the shares listed as beneficially owned and none of the shares listed are pledged as security. |
| Phantom Shares |
3.Pina Albo | As reported on Schedule 13G/A filed January 27, 2016, Blackrock, Inc. and its subsidiaries have sole voting and dispositive power over all the beneficially owned shares. |
| 4,612 |
4.J. Cliff Eason | As reported on a Schedule 13G/A filed February 12, 2016, FMR LLC shares dispositive voting power with certain of its subsidiaries and affiliates and other companies, including FIAM LLC, Fidelity Institutional Asset Management Trust Company, FMR Co., Inc. and Strategic Advisers, Inc. |
| 30,240 |
5.Patricia L. Guinn | As reported on Schedule 13G/A filed February 10, 2016, The Vanguard Group shares dispositive voting power of 43,551 shares with Vanguard Fiduciary Trust Company, its wholly-owned subsidiary and 7,300 shares with Vanguard Investments Australia, Ltd., its wholly-owned subsidiary. |
| 1,868 |
6.Hazel M. McNeilage | Includes3,880 |
| Stephen O'Hearn | 1,202 |
| Frederick J. Sievert | 2,1151 |
| Steven C. Van Wyk | 4,623 |
1Balance for Mr. Danahy 13,862Frederick J. Sievert is net of a January 2022 distribution of 4,464 phantom shares owned by John F. Danahy 2015 Grantor Retained Annuity Trust, of which Mr. Danahy is trustee.and 55 dividend equivalent shares credited to his account. |
| |
7. | Includes for Mr. Henderson 3,000 shares owned by Bess L. Henderson Trust, of which Mr. Henderson is trustee and primary beneficiary. |
| |
8. | Includes for Mr. Woodring 309,439 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. |
| |
9. | Includes for Mr. Lay 61,620 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. Mr. Lay shares voting and investment power for all of the shares with his spouse. |
| |
10. | Includes for Ms. Manning 48,416 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. |
| |
11. | Includes for Mr. Néemeh 41,505 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. |
| |
12. | Includes for Ms. Kinnaird 25,807 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. |
| |
13. | Includes a total of 486,787 shares of common stock subject to stock options and/or SARs that are exercisable within 60 days. |
EXECUTIVE STOCK OWNERSHIP GUIDELINES
In order to
Executive Stock Ownership Guidelines
To further align the interests of our management and our shareholders, our executive stock ownership guidelines provide that our senior executives should hold a specified number of shares of Company stock, expressed as a multiple of such executives' base salary, as follows:
|
| | | | |
| Position | Share Ownership Requirement |
| President & Chief Executive Officer | 85,000 shares |
President | 85,000 shares8x Base Salary |
| Senior Executive Vice President | 36,000 shares5x Base Salary |
Executive Vice President and | 2x - 4x Base Salary |
| Senior Vice President | 2,500 – 23,000 shares1x - 2x Base Salary |
The number of shares includes only those shares of common stock that are directly or beneficially owned by the executive.executive plus unvested RSUs discounted by a notional tax rate. Executives who are subject to the guidelines must retain the net shares (net of applicable taxes for PCS, PSU and RSU awards and, for SARs and stock options, the net of exercise cost and taxes) from any SARs/SARs and stock option exercise or award of PCS, PSU or RSU until they satisfy the applicable stock ownership requirement.
As of December 31, 2015, Messrs. Woodring and Lay have met the stock ownership requirements through holdings of shares of our common stock. Due to promotions in 2015, both Ms. Manning and Mr. Néemeh have significantly increased ownership requirements. As of December 31, 2015, both2021, Ms. Manning and Messrs. Larson and Cheng met their respective ownership requirements. Ms. Barbi and Mr. Herrmann joined RGA in January 2020 and November 2020, respectively, and have not yethad sufficient time to meet their stock ownership requirement.
Prohibitions against Short Sales, Hedging, Margin Accounts and Pledging
The Company’s Insider Trading Policy (the "Policy") prohibits directors, executive officers, employees, and others from engaging in short sale transactions in Company securities and prohibits the purchase or use, directly or indirectly, of Contents
met those requirements. Ms. Kinnaird has not been employed byfinancial instruments that are designed to hedge or offset any decrease in the market value of the Company’s securities (including prepaid variable forward contracts, equity swaps, collars, and exchange funds). In addition, the Policy strongly discourages holding the Company’s securities in margin accounts or pledging Company for enough yearssecurities as collateral. These restrictions are intended to reasonably expect attainmentprevent a misalignment of her stock ownership goals.interests with the Company’s shareholders or the appearance of such a misalignment. An exception to the general ban on hedging may be sought from the General Counsel on a case-by-case basis, subject to pre-clearance procedures.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and the NYSE. Directors, executive officers and greater than 10% shareholders are required by SEC regulation to furnish us with copies of all Forms 3, 4 and 5 they file.
Based solely on our review of the copies of such forms we have received or that were filed with the SEC, or written representations from certain reporting persons, we believe that all our directors, executive officers and greater than 10% beneficial owners complied with all filing requirements applicable to them with respect to transactions during 2021.
2015.
56
ADDITIONAL INFORMATION
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
1. Who is entitled to vote and how many votes do I have?
If you are a holder of record of Company common stock at the close of business on March 16, 2016,31, 2022, you are eligible to vote at the 20162022 Annual Meeting. For each matter presented for vote, you have one vote for each share you own.
2. How do I vote?
Your vote is important. Please cast your vote as soon as possible using one of the following methods.
By Telephone or Internet. All shareholders of record also can vote by touchtone telephone within the U.S., U.S. territories and Canada, using the toll-free telephone number on the proxy card, or through the Internet, using the procedures and instructions described on the proxy card. The telephone and Internet voting procedures are designed to authenticate shareholders’shareholders' identities, to allow shareholders to vote their shares and to confirm that their instructions have been recorded properly. You can vote via the Internet (www.proxyvote.com) or via telephone by calling 1-800-690-6903 by 11:59 p.m., Eastern Time, on May 18, 2016.24, 2022.
By Written Proxy. All shareholders of record can vote by written proxy card. If you received a proxy card or voting instruction form in the mail, you may vote by completing, signing, dating and returning your proxy card in the return envelope provided to you in accordance with the instructions provided with the proxy card. If you sign and return your proxy card but do not mark any selections giving specific voting instructions, your shares represented by that proxy will be voted as recommended by the Board of Directors.
In PersonAt the Meeting. All shareholders of record may vote in person at the meeting. Whether you plan to attend the meeting or not, we encourage you to vote by proxy as soon as possible. The proxy committee will vote your shares according to your directions.
3. Can I change my vote?
There are several ways in which you may revoke your proxy or change your voting instructions before the time of voting at the meeting:
•Vote again by telephone or at the Internet website.
•Mail a revised proxy card or voting instruction form that is dated later than the prior one.
•Vote in person at the Annual Meeting.
•Notify the Company’sCompany's Corporate Secretary in writing that a prior proxy is revoked or voting instructions are changed.
Please note that in orderfor your vote to be counted, the revocation or change must be received by 11:59 p.m., Eastern Time, on May 18, 2016.24, 2022.
4. What is a Broker Non-Vote?
A "broker non-vote" occurs when a broker submits a proxy for the meeting with respect to a discretionary matter but does not vote on non-discretionary matters because the beneficial owner did not
provide voting instructions on those matters. Under NYSE rules, the proposal to ratify the appointment of independent auditors is considered a "discretionary" item. This means that brokerage firms may vote in their discretion on behalf of clients (beneficial owners) who have not furnished voting instructions at least 15 days before the date of the Annual Meeting. In contrast, all of the other proposals set forth in this Proxy Statement are "non-discretionary" items—brokerage firms that have not received voting instructions from their clients on these matters may not vote on these proposals.
5. Who pays for the solicitation of proxies?
The Company pays the cost of soliciting proxies. Proxies will be solicited on behalf of the Board of Directors by mail, telephone and other electronic means or in person.
6. How do I comment on Company business?
We collect comments from the proxy card if you vote by mailing the proxy card. You may also mail comments to our Corporate Secretary at our corporate headquarters. Although it is not possible to respond to each shareholder, your comments help us to understand your concerns.
7. Where can I find additional information about the Company?
The Company’sCompany's website, www.rgare.com, contains additional information about the Company, including:
|
| |
● | •This Proxy Statement and our 2021 Annual Report to Shareholders; •Our Code of Conduct, the Directors' Code of Business Conduct and Ethics and our 2015 Annual Report to Shareholders; |
● | Our Principles of Ethical Business Conduct, Directors’ Code of Conduct and Financial Management Code of Professional Conduct (see page 12);•Our Board's Corporate Governance Guidelines and charters for the Audit, Human Capital and Compensation, Investment, Nominating and Governance and Risk Committees. The committee charters include a detailed description of the roles and responsibilities of each committee (see page 17); •The process by which interested parties and shareholders can communicate with our directors and the Board; and •Additional financial information can be found in the Quarterly Financial Supplement on the Investor Relations portion of the website in the "Quarterly Results" tab in the "Featured Report" section. |
● | Our Board’s Corporate Governance Guidelines and charters for the Audit, Compensation, Nominating and Governance and Finance, Investment and Risk Management Committees. The committee charters include a detailed description of the roles and responsibilities of each committee (see page 13); |
● | The process by which interested parties and shareholders can communicate with our directors and the Board; and |
● | Additional financial information can be found in the Quarterly Financial Supplement on the Investor Relations portion of the website in the "Quarterly Results" tab in the "Featured Report" section. |
Information on our website does not constitute part of this Proxy Statement.
You may also write us at our corporate headquarters, 16600 Swingley Ridge Road, Chesterfield, Missouri 63017, to receive the following information, without charge:
|
| | | | |
| Shareholder Request | RGA Contact |
| A copy of any of the codes of conduct or governance documents described above | Investor Relations |
| A copy of our Articles of Incorporation, Bylaws, this Proxy Statement, form of proxy card and our Annual Report to Shareholders | Corporate Secretary |
Interested parties and shareholders may communicate directly with our ChairmanChair of the Board, Mr. Eason | General Counsel |
58
VOTING
Each share of common stock outstanding at the close of business on the record date March 16, 2016, is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on. Under Missouri corporate law, the approval of any action taken at the annual meetingAnnual Meeting is based on votes cast. If a quorum is present, the votes necessary to approve allthe proposals or to act on any other matters properly brought before the meeting, are the affirmative votes of the holders of a majority of the shares of our common stock entitled to vote which are present in person or represented by proxy at the 2016 Annual Meeting.as follows:
| | | | | | | | |
| Item | Proposal | Vote Required to Adopt the Proposal |
| 1. | Election of Directors | The vote required to elect each director is the affirmative votes of the holders of a majority of the common stock entitled to vote which are present in person or represented by proxy at the Annual Meeting. |
| 2. | Shareholders' Advisory Vote on Executive Compensation | The vote required to pass this proposal is the affirmative votes of the holders of a majority of the common stock entitled to vote which are present in person or represented by proxy at the Annual Meeting. |
| 3. | Ratification of Appointment of Independent Auditor | The vote required to pass this proposal is the affirmative votes of the holders of a majority of the common stock entitled to vote which are present in person or represented by proxy at the Annual Meeting. |
Shareholder approval occurs if the votes cast in favor of the proposal exceed the votes cast against the proposal. "Votes cast" on these proposals means votes "for" or "against" a particular proposal. Abstentions and broker non-votes are not considered votes cast on these proposals and therefore have no effect on the outcome of these proposals. In uncontested elections, directors are elected by a majority of votes cast. Shares represented by proxies which are marked or voted "withhold authority" with respect to the election of any one or more nominees for election as Directors (Item 1), proxies which are marked or voted "abstain" on the proposal to approve the Company’s executive compensation or the proposal to ratify the appointment the Company’s independent auditor,other proposals, and proxies which are marked or voted to deny discretionary authority on any other matters will be counted for the purpose of determining the number of shares represented by proxy at the meeting.Annual Meeting. Such proxies will thus have the same effect as if the shares represented thereby were voted against such nominee or nominees, against the proposal to approve the Company’s executive compensation, against the proposal to ratify the appointment of the Company’s independent auditorproposals and against any such other matters, respectively.matters.
If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter and thus will have no effect on the outcome of the vote with regard to such matters. Please note that brokers cannot vote uninstructed shares on your behalf in director elections or with regard to executive compensation matters. For your vote to be counted, you must submit your voting instruction form to your broker.
We know of no other matters to come before the meeting. If any other matters properly come before the meeting, the proxies solicited hereby will be voted on such matters in accordance with the judgment of the persons voting such proxies. Voting results will be disclosed in our Current Report on Form 8-K filed with the SEC within four business days following the 2022 Annual Meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals submitted under the process prescribed by the SEC (in Rule 14a-8 of the Securities Exchange Act of 1934) for presentation at the 2017 Annual Meeting must be received by us by December 7, 2016, for inclusion in our Proxy Statement and proxy relating to that meeting. Upon receipt of any such proposal, we will determine whether or not to include such proposal in the Proxy Statement and proxy in accordance with regulations governing the solicitation of proxies. We currently anticipate that the 2017 Annual Meeting will be held on May 18, 2017.
In order for a shareholder to bring business before a shareholder meeting, timely notice must be given to us within the time limits described above. Such notice must include a description of the proposed business, any material interest of the shareholder proponent or beneficial owner (or their respective affiliates, associates and those with whom they are acting in concert) in the proposed business; the text of the proposal or business (including the text of any resolutions proposed); and a description of all agreements and arrangements between or among such shareholder, beneficial owner and their respective affiliates, associates and those with whom they are acting in concert, and any other person in connection with the
proposal. Required disclosures should be updated and supplemented, if necessary, so that they are accurate as of the record date for a meeting and as of ten business days prior to the meeting. The shareholder proposing business or making a nomination (or a qualified representative of the shareholder) must appear at the applicable meeting of shareholders to present such business or nomination in order for it to be considered.
The Board or the presiding officer at the Annual Meeting may reject any such proposals that are not made in accordance with these procedures or that are not a proper subject for shareholder action in accordance with applicable law. The foregoing time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority. These requirements are separate from and in addition to the requirements a shareholder must meet to have a proposal included in our Proxy Statement. In each case, the notice must be given to our Secretary at our corporate headquarters.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as "householding," potentially provides extra convenience for shareholders and cost savings for companies. Some brokers household proxy materials, delivering a single proxy statement to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and
would prefer to receive a separate proxy statement or if your household currently receives multiple copies and would like to participate in householding in the future, please notify your broker.
60SHAREHOLDER PROPOSALS
Shareholder proposals submitted under the process prescribed by the SEC (in Rule 14a-8 of the Securities Exchange Act of 1934) for presentation at the 2023 Annual Meeting must be received by us by December 8, 2022, for inclusion in our Proxy Statement and proxy relating to that meeting. Upon receipt of any such proposal, we will determine whether or not to include such proposal in the Proxy Statement and proxy in accordance with regulations governing the solicitation of proxies. We currently anticipate that the 2023 Annual Meeting will be held in-person on May 24, 2023.
TableFor a shareholder to bring business before a shareholder meeting, timely notice must be given to the Company within the time limits described above. Such notice must include a description of Contentsthe proposed business, any material interest of the shareholder proponent or beneficial owner (or their respective affiliates, associates and those with whom they are acting in concert) in the proposed business; the text of the proposal or business (including the text of any resolutions proposed); and a description of all agreements and arrangements between or among such shareholder, beneficial owner and their respective affiliates, associates and those with whom they are acting in concert, and any other person in connection with the proposal. Required disclosures should be updated and supplemented, if necessary, so that they are accurate as of the record date for a meeting and as of ten business days prior to the meeting. The shareholder proposing business or making a nomination (or a qualified representative of the shareholder) must appear at the applicable meeting of shareholders to present such business or nomination for it to be considered.The Board or the presiding officer at the Annual Meeting may reject any such proposals that are not made in accordance with these procedures or that are not a proper subject for shareholder action in accordance with applicable law. The foregoing time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority. These requirements are separate from and in addition to the requirements a shareholder must meet to have a proposal included in our Proxy Statement. In each case, the notice must be given to our Secretary at our corporate headquarters.
USE OF NON-GAAP FINANCIAL MEASURES
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, among others, statements relating to projections of the future operations, strategies, earnings, revenues, income or loss, ratios, financial performance and growth potential of the Company. Forward-looking statements often contain words and phrases such as “intend,” “expect,” “project,” “estimate,” “predict,” “anticipate,” “should,” “believe” and other similar expressions. Forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements are not a guarantee of future performance and are subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance, and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.
The effects of the ongoing novel coronavirus (“COVID-19”) pandemic and the response thereto on economic conditions, the financial markets and insurance risks, and the resulting effects on the Company’s financial results, liquidity, capital resources, financial metrics, investment portfolio and stock price, could cause actual results and events to differ materially from those expressed or implied by forward-looking statements. Further, any estimates, projections, illustrative scenarios or frameworks used to plan for potential effects of the pandemic are dependent on numerous underlying assumptions and estimates that may not materialize. Additionally, numerous other important factors (whether related to, resulting from or exacerbated by the COVID-19 pandemic or otherwise) could also cause actual results and events to differ materially from those expressed or implied by forward-looking statements including, without limitation: (1) adverse changes in mortality, morbidity, lapsation or claims experience, (2) inadequate risk analysis and underwriting, (3) adverse capital and credit market conditions and their impact on the Company’s liquidity, access to capital and cost of capital, (4) changes in the Company’s financial strength and credit ratings and the effect of such changes on the Company’s future results of operations and financial condition, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) requirements to post collateral or make payments due to declines in market value of assets subject to the Company’s collateral arrangements, (7) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (8) the effect of the Company parent’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations, (9) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in the Company’s current and planned markets, (10) the impairment of other financial institutions and its effect on the Company’s business, (11) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (12) market or economic conditions that adversely affect the value of the Company’s investment securities or result in the impairment of all or a portion of the value of certain of the Company’s investment securities, that in turn could affect regulatory capital, (13) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (14) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (15) the fact that the determination of allowances and impairments taken on the Company’s investments is highly subjective, (16) the stability of and actions by governments and economies in the markets in which the Company operates, including ongoing uncertainties regarding the amount of U.S. sovereign debt and the credit ratings thereof, (17) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers and others, (18) financial performance of the Company’s clients, (19) the threat of natural disasters, catastrophes, terrorist attacks, epidemics or pandemics anywhere in the world where the Company or its clients do business, (20) competitive factors and competitors’ responses to the
Company’s initiatives, (21) development and introduction of new products and distribution opportunities, (22) execution of the Company’s entry into new markets, (23) integration of acquired blocks of business and entities, (24) interruption or failure of the Company’s telecommunication, information technology or other operational systems, or the Company’s failure to maintain adequate security to protect the confidentiality or privacy of personal or sensitive data and intellectual property stored on such systems, (25) adverse litigation or arbitration results, (26) the adequacy of reserves, resources and accurate information relating to settlements, awards and terminated and discontinued lines of business, (27) changes in laws, regulations, and accounting standards applicable to the Company or its business, and (28) other risks and uncertainties described in this document and in the Company’s other filings with the Securities and Exchange Commission (“SEC”).
Forward-looking statements should be evaluated together with the many risks and uncertainties that affect the Company’s business, including those mentioned in this document and described in the periodic reports the Company files with the SEC. These forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update these forward-looking statements, even though the Company’s situation may change in the future. For a discussion of these risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A – “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
USE OF NON-GAAP FINANCIAL MEASURES
The Company uses a non-GAAP financial measure called adjusted operating income as a basis for analyzing financial results. This measure also serves as a basis for establishing target levels and awards under the Company’sCompany's management incentive programs. Management believes that adjusted operating income, on a pre-tax and after-tax basis, better measures the ongoing profitability and underlying trends of the company’sCompany's continuing operations, primarily because that measure excludes substantially all of the effect of net investment related gains and losses, as well as changes in the fair value of certain embedded derivatives and related deferred acquisition costs. These items can be volatile, primarily due to the credit market and interest rate environment, and are not necessarily indicative of the performance of the company’sCompany's underlying businesses. Additionally, adjusted operating income excludes any net gain or loss from discontinued operations, the cumulative effect of any accounting changes, tax reform, and other items that management believes are not indicative of the company’sCompany's ongoing operations. The definition of adjusted operating income can vary by company and is not considered a substitute for GAAP net income. Reconciliations tofrom GAAP net income are provided in the following tables.
Book value per share excluding the impact of AOCI is a non-GAAP financial measure that management believes is important in evaluating the balance sheet in order to ignore the effects of unrealized amounts primarily associated with mark-to-market adjustments on investments and foreign currency translation.
OperatingAdjusted operating income per diluted share is a non-GAAP financial measure calculated as adjusted operating income divided by weighted average diluted shares outstanding. Adjusted operating return on equity is a non-GAAP financial measure calculated as adjusted operating income divided by average shareholders’stockholders’ equity excluding AOCI. Similar to adjusted operating income, management believes these non-GAAP financial measures better reflect the ongoing profitability and underlying trends of the Company’s continuing operations, they also serve as a basis for establishing target levels and awards under RGA’s management incentive programs.
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| Reinsurance Group of America, Incorporated and Subsidiaries |
| Reconciliation of Consolidated Net Income to Operating Income |
| (Dollars in thousands) |
| (Unaudited) |
| | | Twelve Months Ended December 31 | | |
| | | 2015 | | 2014 | | 2013 | | |
| GAAP net income | $502,166 | | $684,047 | | $418,837 | | |
| Reconciliation to operating income: |
| |
| |
| | |
| Capital (gains) losses, derivatives and other, included in investment related (gains) losses, net | 30,020 |
| | (64,625 | ) | | 103,495 |
| | |
| Capital (gains) losses on funds withheld, included in investment income | (10,640 | ) | | (8,590 | ) | | (8,345 | ) | | |
| Embedded derivatives: |
| |
| |
| | |
| | Included in investment related (gains) losses, net | 85,789 |
| | (44,941 | ) | | (137,948 | ) | | |
| | Included in interest credited | (8,178 | ) | | (274 | ) | | (51,330 | ) | | |
| DAC offset, net | (31,996 | ) | | 72,721 |
| | 63,966 |
| | |
| Non-investment derivatives | (77 | ) | | (289 | ) | | --- |
| | |
| Gain on repurchase of collateral finance facility securities | --- | | --- | | (30,229 | ) | | |
| | Operating income | $567,084 | | $638,049 | | $358,446 | | |
| | | Twelve Months Ended December 31 | | |
| | | 2015 | | 2014 | | 2013 | | |
| Diluted earnings per share from operating income | $8.43 | | $9.12 | | $4.95 | | |
| Earnings per share from net income: |
| |
| |
| | |
| | Basic earnings per share | $7.55 | | $9.88 | | $5.82 | | |
| | Diluted earnings per share | $7.46 | | $9.78 | | $5.78 | | |
| Weighted average number of common and common |
| |
| |
| | |
| | equivalent shares outstanding (diluted) | 67,292 |
| | 69,962 |
| | 72,461 |
| | |
| | | At December 31 |
| | | 2015 | | 2014 | | 2013 | | 2012 |
| Common shares outstanding | 65,205 |
| | 68,773 |
| | 70,768 |
| | 73,927 |
| Book value per share outstanding | $94.09 | | $102.13 | | $83.87 | | $93.47 |
| | Less effective of FAS115 | $14.35 | | $23.63 | | $11.59 | | $25.40 |
| | Less effect of CTA | $(2.78) | | $1.19 | | $2.93 | | $3.62 |
| | Less effect of pension benefit | $(0.71) | | $(0.72) | | $(0.31) | | $(0.50) |
| Book value per share outstanding, before impact of AOCI | $83.23 | | $78.03 | | $69.66 | | $64.95 |
| | | | | | | | | | | | | | |
| Reinsurance Group of America, Incorporated and Subsidiaries |
| Reconciliation of Non-GAAP Measures |
| (Dollars in millions) |
| (Unaudited) |
|
| Net income to adjusted operating income | Twelve Months Ended December 31 |
| 2021 | 2020 | 2019 |
| Net income | $ | 617 | | $ | 415 | | $ | 870 | |
| Reconciliation to adjusted operating income: | | | |
| Capital (gains) losses, derivatives and other, included in investment related gains/losses, net | (338) | | (6) | | (43) | |
| Capital (gains) losses on funds withheld, included in investment income, net of related expenses | (4) | | 3 | | 4 | |
| Embedded derivatives: | | | |
| Included in investment related gains/losses, net | (79) | | 43 | | (13) | |
| Included in interest credited | (36) | | 16 | | 36 | |
| DAC offset, net | 30 | | (6) | | (25) | |
| Investment (income) loss on unit-linked variable annuities | (3) | | (9) | | (21) | |
| Interest credited on unit-linked variable annuities | 3 | | 9 | | 21 | |
| Interest expense on uncertain tax provisions | (21) | | 9 | | 14 | |
| Non-investment derivatives and other | (2) | | 1 | | 2 | |
| Uncertain tax positions and other tax related items | (90) | | 21 | | 8 | |
| Adjusted operating income | 77 | | 496 | | 853 | |
| Excluded unrealized gains1 | 158 | | — | | — | |
| Adjusted operating income for ABP purposes | $ | (81) | | $ | 496 | | $ | 853 | |
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| Earnings per share | Twelve Months Ended December 31 |
| 2021 | 2020 | 2019 |
| Diluted earnings per share from adjusted operating income | $1.13 | $7.54 | $13.35 |
| Diluted earnings per share from excluded unrealized gains1 | $2.31 | — | — |
| Diluted earnings per share from adjusted operating income for ABP purposes | -$1.18 | $7.54 | $13.35 |
| Earnings per share from net income: | | | |
| Basic earnings per share | $9.10 | $6.35 | $13.88 |
| Diluted earnings per share | $9.04 | $6.31 | $13.62 |
| Weighted average number of common and common | | | |
| Equivalent shares outstanding (diluted) | 68,286 | 65,835 | 63,882 |
1Adjusted operating income per share for ABP purposes excludes approximately $158 million of unrealized gains, net of tax, associated with the Company’s investments in limited partnerships and private equity funds for which it utilizes the equity method of accounting. Unrealized gains on these types of investments were not contemplated when the 2021 ABP performance goals were established and therefore the Committee determined that it is more appropriate to exclude them from actual 2021 performance. |
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| Book value per share | |
| 2021 | 2020 | 2019 | 2018 |
| Common shares outstanding | 67,171 | | 67,957 | | 62,656 | | 62,814 | |
| | | | |
| Book value per share outstanding | $193.75 | $211.19 | $185.17 | $134.53 |
| Less effect of AOCI: | | | | |
| Accumulated currency translation adjustments | $(0.13) | $(1.02) | $(1.46) | $(2.69) |
| Unrealized appreciation of securities | $55.09 | $80.94 | $52.65 | $13.63 |
| Pension and postretirement benefits | $(0.74) | $(1.06) | $(1.12) | $(0.80) |
| Book value per share outstanding, before impact of AOCI | $139.53 | $132.33 | $135.10 | $124.39 |
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